PIA soars as global industry nosedives
The events of September 11, which had the worst effect in the history of global aviation, had a different impact on Pakistan International Airlines (PIA).
PIA, which will cease operations in loss-making routes and increase frequencies on popular ones, is hungry for new aircraft, either on lease or purchase. Five aircraft, either Boeing 777s or A320s, are being considered. It has a fleet of 46.
"Now the price of planes have gone down by almost a half. A Boeing 777, which used to cost $190 million is available for around $95 million. We have earmarked $175 million as down payment for purchasing five aircraft, either new or slightly old," said Lieutenant General (Rtd) Hamid Nawaz Khan, chairman.
"We are investing $12 million to redesign half a dozen cabins. In some aircraft, we are doing away with first or business class cabins and in some we are reducing them as demand is more for economy class seats."
The company, which posted a net profit of Rs600 million in the last seven months, forecasts earnings to grow to Rs2.4 billion in the next financial year.
PIA, in the red for years due to mismanagement and political appointments, started to turn around from August 2001, because of ongoing restructuring.
It suffered a loss of Rs5 billion in 2000, which rose to Rs8.8 billion in the 18 months to June. The government then decided to support the restructuring plan under Khan and decided to pump Rs20 billion over 42 months from mid-2001.
"The government has already released Rs6 billion and another Rs4 billion is in place as part of the debt restructuring," he said.
"The government is also going to issue term certificates, which will fetch an additional Rs15 billion, to support the growth of the airline. So, in effect, we are having a Rs35 billion cash injection from the government.
"PIA made Rs300 million in six months from July last year. In January, we made a profit of another Rs300 million, which shows that the organisation is back on track."
The worst for PIA is over and it is now looking to improve its corporate image.
"We have begun to implement the changes and 14 top officials have been excused from their duties."
PIA will reduce the number of employees from 16,000 by transferring them to subsidiaries. But Khan refused to give an indication of the proposed cuts.