PIA could grow its annual revenues to $1.7bn by 2026

KARACHI: Under the IATA consultancy business plan 2022-26, Pakistan International Airlines (PIA) could grow its annual revenue to $1.7 billion by 2026, if it is run by private management rules to curtail external influence.

According to details, the world’s premium aviation consultancy agency, IATA Consultancy, presented a comprehensive business plan for the national flag carrier covering the period 2022 to 2026 to the Minister of Finance and Minister of Aviation, here on Tuesday.

The business plan preparation was commissioned by the Ministry of Finance last year consequent to the report by the ex-SAPM on Public Enterprises Reforms Dr Ishrat Husain to the Prime Minister and the federal cabinet.

Dr Ishrat’s report, which was also termed as a complete restructuring plan for PIA with the objective to not only turn around PIA towards profitability but also convert it into an agile business unit, focused on its core operations.

As the plan involved financial restructuring to the tune of hundreds of billions of rupees, the officials at the helms of the finance ministry and the planning commission demanded a Business Plan prepared by an international consultant for PIA before committing to the huge amounts.

The International Air Transport Agency (IATA)’s consultancy services were hired for that purpose, which after one year of spadework has developed a 5-year corporate business transformation plan with the current year 2022 as the base year and going all the way to 2026.

The key postulates of the business plan encompass, financial restructuring, independent decision making, re-organization of company structure, restrictions to Core Business, Financial discipline, HR rationalization cost controls, review destinations, a fleet planning exercise, and network expansion thereby increasing PIA’s network spread and passenger uplift.

PIA’s fleet is expected to grow from the current 29 to 49 by 2026, comprising 16 wide-body, 27 narrow-body, and 6 turbo propeller aircraft.

The fleet will be used to expand on current productive routes of the UK, KSA, UAE, and Gulf sectors as well as will be operated on identified markets of Baku, Hong Kong, Istanbul, Kuwait, Tehran, Urumqi, and Singapore.

Resultantly, PIA’s passengers would grow from 5.2 million per annum to 9.0 million per annum and revenues to grow to US$ 1.7 Billion per annum by 2026.

PIA with these initiatives will achieve break-even by 2025. The assets of PIA will also increase from the current US$1.196 Billion to US$2.183 Billion. PIA, which is currently operating 359 round trip flights per week, will be operating 581 round trip flights at the end of the program.

The outlook also takes into account the global aviation scenarios and challenges, most specifically the COVID-19 pandemic-related travel restrictions and reduced demand, and the macro-environmental/economical challenges faced by the country.

However, the plan has been made conditional to certain factors, the most important of which is the commitment by the Government of Pakistan to undertake the Financial Restructuring of PIA for the legacy debt on its balance sheets and which are beyond the serviceable capacity of the airline.

This will also ease the burden on its cash flows, enabling it to undertake product improvements initiatives, critical for its long-term sustenance.

The plan also urges the government to ensure compliance to the National Aviation Policy in its true spirit, providing a level playing field to the Pakistani carriers, which often find themselves at a disadvantage in their own country. Additionally, IATA Consultancy is of the view that PIA may be run under private management rules, also pertaining to the procurement practices.

It also suggests that external influence on company matters may be curtailed and the consistent public scrutiny may be scaled back as it not only hinders the critical corporate responsibilities of the managers but also creates a negative PR for the company resulting in its corporate repute and revenue streams.

Copyright Business Recorder, 2022