Pakistan International Airlines (PIA) Managing Director Captain Mohammad Aijaz Haroon has disclosed that in the first quarter of 2009 (January-March), national carrier has earned an operating profit of Rs 2 billion after six years. He was addressing the 'Meet the Press' at Lahore Press Club on Thursday.
He said that last time the airline saw operating profit was six years back and in 2008 for the same period the PIA had to bear Rs 1.9 billion operating loss. He also pointed out that during the first quarter of the ongoing year, they have almost achieved breakeven, as while the operating profit was Rs 2 billion and instalment for repayment of loans was Rs 2.5 billion.
"This is indeed is a positive change in the finances of the national carrier. However, the airline is still running in loss, but it is hoped that our efforts would bring the PIA at breakeven by the end of year, if not earlier," he added.
Captain Haroon told the press that the first quarter results of 2009 also reflected growth in the revenue of the national carrier, from Rs 17 billion to Rs 21.2 billion, a growth of 19 percent. He said these results are against the trend that prevails overall in the international aviation industry, which was seeing a decline of 12 percent.
"Target set for revenue growth fell short by eight percent, due to political factors that held back business activities. However, the bottom line is the airline has witnessed a turnaround in its financial health and it is set on a path of progress," he added.
According to him, decline in fuel prices in the international market proved blessing in disguise for the PIA, as it helped the national carrier to come out of the financial crisis. They have a plan to control losses by generating more revenue and cutting unnecessary costs.
"2008 was a difficult year for the international aviation industry, as the oil touched its peak mark of US $148 per barrel, and hence many international airlines went into massive financial crisis. However, the PIA managed to sustain itself in these difficult times and in one year managed to increase its revenue and achieve operating profit of Rs 2 billion," he added.
To a question, he stated that at present the PIA was not in a position to decrease its fares. He observed that the oil prices in the international market started to increase in 2004, and had the last management increased the airline's fares in proportion to the increase in oil prices, from time to time, there would not had been a sudden surge in air fares of PIA. "Hence, late increase in PIA fares led to huge losses and the airline had to opt for bank loans to meet the losses, which created financial crisis," he added.
On Haj fare, the PIA MD pointed out that its fare is determined by the demand and supply mechanism. He observed that in India it is cheaper because the Indian government subsidises the Haj fare and if the Pakistani government shows a similar gesture then PIA Haj fare would also be low. " PIA does not make any profit on Haj flights, however this year it has been proposed to decrease the Haj fares," he added.
When asked about the PIA pilot go-slow protest, he maintained that a certain section in the airline, referring to pilots, demanded an increase in salary, who incidentally are the highest paid staff of PIA. "We have not met their demands, but an MoU has been signed between us, under which we have offered them extra 20 hours of flying hours per month (from 50 to 70). This would enhance their salary to meet expenses. I believe in serving the interests of the national carrier and protect the interests of all its employees and not just my community," he added.
He stated that when the PIA's financial health improves, they would share a certain percentage of the profit with the employees and a ratio would formulate in due course. "The PIA employees have to make efforts to transform the national carrier in to a viable airline," he added. To another question, he said terrorism has dented the business of PIA, as due to it tourism in the country is zero and foreign businessmen are not reluctant to travel to Pakistan.
"Yes, the PIA envisages to bring a new fleet of aircraft this year, since it is a need; it is under discussion and is in final stages. It would be finalised by the end of May," he disclosed.
On the recent comments of Advisor to the Prime Minister on Finance Shaukat Tarin, that both PIA and Pakistan Railways are 'white elephant' and should be privatised, he refused to comment on it, but he did say that the new management have been brought to make PIA a profitable organisation and they are working on that.
He also said that they have not received grant or financial support from the government and the airline is meeting its expenses from its own revenue. "The PIA has turned to banks to fill the financial gaps," he added. Captain Haroon categorically stated that they have no plan of privatising the national carrier assets, however, it would be used as security for securing loans to buy aircraft.