The Pakistan International Airlines (PIA) shows a net revenue loss of Rs 2.984 billion during the fourth quarter (April-June) of FY2005-06 due to high fuel price, the finance ministry said on Thursday.
During the quarter under review, it generated revenues of Rs 16.686 billion while its expenditures on operational activities and interest payments stood at Rs 19.67 billion, revealed the financial improvement plan (April-June 2006) which was released by the finance ministry.
It is worth noting the PIA targeted to bring down losses to Rs 206 million in the fourth quarter; however, it has shown Rs 2.774 billion losses for the same period.
It further says the PIA could not achieve the revenue target as it lagged behind by Rs 75 million during the quarter under review. For this deficiency, the ministry gave increase in fuel prices as the main reason. On expenditure side, it spent Rs 19.67 billion against estimates of Rs 16.97 billion for the quarter. During this period, fuel expenses rose to Rs 8.405 billion against estimates of Rs 6.113 billion, showing a growth of Rs 2.292 billion. Fuel prices continued to rock the entire airline industry as these bedevilled the budget and projections worked out by most of the airlines.
Maintenance expenditures also surpassed the target of Rs 1.638 billion by Rs 321 million. The ministry says: "The increase in maintenance cost is due to increase in foreign object damage and life-limited parts."
Aircraft rental increased to Rs 349 million from the original target of Rs 176 million, showing a near double increase (Rs 173 million). The retirement of six A-300 and two B-747 aircraft during the year 2005 necessitated extra leasing requirement, which was reflected in the increase in flight equipment rental expense.
Financial cost is also showing an increase owing to additional borrowing, including the bridge loan for the purchase of 49 percent shares of PIA-IL and requirement of additional working capital. Further rise in interest rates has increased interest payments.
The data reveals outflow of Rs 215 million during the period against the target of Rs 57 million was mainly due to increase in inventory items. The inflow of Rs 1.519 billion instead of targeted inflow of Rs 222 million was mainly due to increase in liability against fuel bills.