PIA suffers $182.33m loss as other airlines mint profit
PIA suffers $182.33m loss as other airlines mint profit
By Atif Khan
ISLAMABAD: Despite other airlines of the industry minting record profits during the year 2007, the Pakistan International Airlines (PIA) suffered a massive loss of $182.33 million, due to high number of employees per aircraft, and absence of implementation of any financial improvement plan.This was revealed in the Auditor General of Pakistan Audit Report 2006-07, tabled at National Assembly.It is pertinent to mention here that almost all airlines operating in the region earned good profits.Air Blue, which is considered the main domestic competitor of PIA, earned a profit of $1.28 million, whereas the competitors on international routes; Emirates Airlines, earned profit of $941 million, Royal Jordanian Airline $28 million, Malaysian Air Lines $265 million, Egypt Air Lines $1,143 million, which is a record. The Auditor General report rejected PIA pleas for blaming increased fuel prices and other challenges the airline industry faced during the year 2006-07 for the losses. All the airlines were exposed to rising fuel prices and other challenges, however, they managed to earn profit, but on the other hand PIA could not even manage to break-even and sustained a loss of $182.33 million in year 2007, the report said.The number of employees in the national airline has always been criticised. A large number of employees have been inducted in the PIA on political basis moreover, the airline has also been experimented by adopting different management models on ad-hoc basis, the PIA sources says.The report pointed out this over staffing and said that the ideal employee to aircraft ratio ranges between, 1:130to 170, whereas in PIA, the employee to aircraft is 1: 418.It further explained that as compare to the number of employee to air craft ratio in the region, PIA has highest number of employees. There are 17,966 employees in PIA for the fleet of 43, whereas, in Japan Airlines, there are 17,925 employees for a fleet of 241, with a ratio, 1: 74, In US airways, the number of employees are 37,675 for a fleet of 357, with a ratio, 1:106, and in Indian Airlines the number of employees are 18, 492, for a fleet of 67, with a ratio, 1:276.The AGP observed that the analysis shows that other airlines are able to achieve better output from minimal workforce, whereas PIA has over employed for its current fleet strength, resulting in an increase in overheadsThe report also observed that financial improvement plans were not prepared in PIA, on regular basis. However, it said, a structure plan of PIA was first prepared on June 06, 2001, where in PIA had succeeded to borrow Rs 20 billion against Government of Pakistan (GoP) guarantee to settle its liabilities and repayment installments amounting to Rs 4.863 billion and payment of purchase of Boeing 777-ER, and 777-200 LR. The report also said that PIA committed to the GoP that with the help of this financial assistance they would become profitable.The report also pointed out that the corporation has been continuously sustaining losses after 2004. At the close of year on 31 December 2006, the accumulated losses stand at Rs 24.563 billion.
http://www.dailytimes.com.pk/default.asp?page=2008\12\28\story_28-12-2008_pg5_13
By Atif Khan
ISLAMABAD: Despite other airlines of the industry minting record profits during the year 2007, the Pakistan International Airlines (PIA) suffered a massive loss of $182.33 million, due to high number of employees per aircraft, and absence of implementation of any financial improvement plan.This was revealed in the Auditor General of Pakistan Audit Report 2006-07, tabled at National Assembly.It is pertinent to mention here that almost all airlines operating in the region earned good profits.Air Blue, which is considered the main domestic competitor of PIA, earned a profit of $1.28 million, whereas the competitors on international routes; Emirates Airlines, earned profit of $941 million, Royal Jordanian Airline $28 million, Malaysian Air Lines $265 million, Egypt Air Lines $1,143 million, which is a record. The Auditor General report rejected PIA pleas for blaming increased fuel prices and other challenges the airline industry faced during the year 2006-07 for the losses. All the airlines were exposed to rising fuel prices and other challenges, however, they managed to earn profit, but on the other hand PIA could not even manage to break-even and sustained a loss of $182.33 million in year 2007, the report said.The number of employees in the national airline has always been criticised. A large number of employees have been inducted in the PIA on political basis moreover, the airline has also been experimented by adopting different management models on ad-hoc basis, the PIA sources says.The report pointed out this over staffing and said that the ideal employee to aircraft ratio ranges between, 1:130to 170, whereas in PIA, the employee to aircraft is 1: 418.It further explained that as compare to the number of employee to air craft ratio in the region, PIA has highest number of employees. There are 17,966 employees in PIA for the fleet of 43, whereas, in Japan Airlines, there are 17,925 employees for a fleet of 241, with a ratio, 1: 74, In US airways, the number of employees are 37,675 for a fleet of 357, with a ratio, 1:106, and in Indian Airlines the number of employees are 18, 492, for a fleet of 67, with a ratio, 1:276.The AGP observed that the analysis shows that other airlines are able to achieve better output from minimal workforce, whereas PIA has over employed for its current fleet strength, resulting in an increase in overheadsThe report also observed that financial improvement plans were not prepared in PIA, on regular basis. However, it said, a structure plan of PIA was first prepared on June 06, 2001, where in PIA had succeeded to borrow Rs 20 billion against Government of Pakistan (GoP) guarantee to settle its liabilities and repayment installments amounting to Rs 4.863 billion and payment of purchase of Boeing 777-ER, and 777-200 LR. The report also said that PIA committed to the GoP that with the help of this financial assistance they would become profitable.The report also pointed out that the corporation has been continuously sustaining losses after 2004. At the close of year on 31 December 2006, the accumulated losses stand at Rs 24.563 billion.
http://www.dailytimes.com.pk/default.asp?page=2008\12\28\story_28-12-2008_pg5_13
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