Home Global Village New PIA chief’s optimism leaves people confused

New PIA chief’s optimism leaves people confused

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News Analysis |

Pakistan International Airlines has been the perfect real time representation of riches to rags. From sacrificing black goats on the tarmac for a safe flight to transporting incumbent Senators to the wrong destination (Yes this happened! Sherry Rehman was that Senator!) to damaging French airplanes on the airstrip; PIA seems to have done it all.

In the past decade or so, PIA has faced the harshest criticism and not without cause. When the decision to privatize the national flag carrier came along it was already in the doldrums. Out of a total fleet of 97, 36 planes are operational. The situation seems cringe-worthy, and it really is. But it has not always been this way. Pakistan International Airlines was once considered one of the finest airlines in the world.

Cyan categorically said that privatization of the airline and employees’ lay-off are both no longer on the agenda. “I have asked the government about its plans for privatization and it replied in the negative,”

Emirates, one of the most prime airlines in the world, was launched by PIA when it was in all of its glory. Currently, PIA has become a burden on Pakistan’s fiscal operations. The year 2004 was the last financial cycle PIA enjoyed a net profit, which amounted to Rs. 2.3 billion. Its share price at the end of December that year was Rs. 13.7. Since then, PIA’s accumulated losses have soared to reach Rs. 319.10 billion by the end of March 2017.

Read more: PIA celebrates Christmas mid-flight

At the same time, its share price has plummeted to Rs. 4.53, a massive 67% plunge. Issues in delivering quality service and involvement of a few staff members in unprofessional, unethical and unlawful activities have hampered its reputation. Although a turn-around seems impossible, there is a certain humming. Nawaz Sharif, then Prime Minister, appointed Musharraf Rasool Cyan as PIA’s chief executive officer who took charge in September 2017 and projections on the airline’s future performance are gaining traction.

In an interview with an online publication, Cyan says the airline’s turnaround will occur in the next 24-30 months. The airline seems to have had troubles because of a backlog of issues, said Cyan, adding that the failure to take decisions has made the situation worse.

“This is all to be achieved in the given timeframe subject to legacy debt (around Rs. 200 billion) not to be counted for the time being,” he said, adding PIA is in talks with the government for putting the legacy debt on the side.

For instance, it has taken some of the aircraft on lease at a higher price than the one prevailing in the market and its IT system remains outdated and obsolete when compared with other players. It has yet to upgrade softwares at several departments including engineering, reservation, flight planning, for efficient use of fuel, and upgrading cabin environment for passengers. It is not using the latest ‘data analytics’, which the modern aviation industry and other businesses are using to snatch market share.

Read more: ‘Jannat’ born on Multan bound PIA flight

The CEO said the company has carried out analysis of which routes are causing the most losses, while studying potential ones where a market could be gained. Cyan said PIA would fly on new international routes in 2018, including Al-Qassim in Saudi Arabia, Guangzhou in China and one more destination in the region, which may be Mashhad in Iran.

On the other hand, it is considering suspending or reducing the number of flights on some routes. The reduction in flight frequency could be seen on the route to Muscat and Kuwait.

Flights to Dubai and Toronto are also incurring losses, but the airline is confident that the routes could be made profitable. Cyan also said Toronto is going to become a connecting flights’ destination for PIA to North America.

Under its project named V1, which means velocity of the aircraft before taking off, the airline has decided to improve services across the board in the next 24 months and generate an ‘operating profit’.

Suspension of flights to New York, which was causing PIA a loss of Rs. 1.5 billion per year, was part of the exercise. Passengers may now travel via Toronto where PIA has increased frequency of flights to five a week. “Redeployment of the aircraft from the loss-making New York route to Saudi Arabia has started earning a profit,” the CEO said.

PIA flies to around 109-110 destinations around the world every day, including the local ones. Similarly, aircraft selection will be made according to distance and booking of seats on flights, he said. With the re-alignment and restructuring, PIA has gradually started recovering.

Read more: PIA turns down bid to sell Roosevelt Hotel

“PIA made additional sales worth Rs. 1.5 billion in November (2017). They rose to Rs. 8 billion from Rs. 6.5 billion (in November 2016). Similar is the situation seen in December 2017.” Under its project named V1, which means velocity of the aircraft before taking off, the airline has decided to improve services across the board in the next 24 months and generate an ‘operating profit’.

On the other hand, it is considering suspending or reducing the number of flights on some routes. The reduction in flight frequency could be seen on the route to Muscat and Kuwait.

As per the five-year business plan presented to the government, PIA would break even in the third year and would generate profit before tax in the fourth year. “Four to six per cent profit is (considered) a healthy profit in the aviation industry,” he said.

“This is all to be achieved in the given timeframe subject to legacy debt (around Rs. 200 billion) not to be counted for the time being,” he said, adding PIA is in talks with the government for putting the legacy debt on the side. Right now, PIA is managing a 36-aircraft fleet. “We aim to take the total number of aircraft to 44 in the next three years,” he said.

Read more: PIA buys four smaller aircrafts on a Rs 13 billion credit…

Cyan categorically said that privatization of the airline and employees’ lay-off are both no longer on the agenda. “I have asked the government about its plans for privatization and it replied in the negative,” he said. He also spoke against the open skies policy and demanded a level playing field.


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