After facing a tough time due to the COVID19 outbreak in the country in in February 2020., Pakistan International Airlines (PIA) is now ready to return back to the skies. The national carrier has expressed hope that a boost to its flight operations would help turn around its financial performance.
“Passenger numbers are expected to grow to 2.8 billion in 2021,” PIA Chief Executive Officer Air Marshal Arshad Malik said in the Annual Report 2020 dispatched to the Pakistan Stock Exchange (PSX) on Monday. The expected number of passengers in 2021 would be one billion more than in 2020, but still 1.7 billion travellers short of the 2019 figure, he added.
PIA has also negotiated with financial institutions for rescheduling its loans, given back a couple of leased aircraft to foreign firms and cut down its workforce by 1,900-2,000 employees (or 14%) by offering them voluntary separation scheme (VSS).
According to the annual report, airline operated higher number of flights (45%) on Middle East routes, followed by 31% on domestic routes during 2020.
“By the end of 2021, stronger revenues will improve the situation, but the first half of 2021 looks extremely challenging,” said Malik. “Airline’s financial performance is expected to see a significant turn for the better in 2021, even if historically deep losses prevail”, he added.
“Passenger yields are expected to be flat and the load factor is expected to improve to 72.2% (an improvement over 65.5% in 2020, but still below the 82.5% achieved in 2019),” the report read. It further stated that Year 2020 proved to be the worst year in the history of global airlines as the pandemic caused the largest losses to air carriers after World War-II.
“However, during Covid-19 period, charter revenue of the company increased significantly due to special charter flights operated by the company,” read the annual report released by PIA.
PIA booked a net loss of Rs34.64 billion in the year ended December 2020 compared to a loss of Rs52.6 billion in 2019, revealed the report.
The ECC has also appproved a restructuring plan worth Rs457 billion for PIA to curb its losses over the next three years by paying off some of the pervious debt and writing off some of the loans.
Owing to improved business confidence and the important role that air cargo played in vaccine distribution, it is expected that the cargo segment of PIA would continue its strong performance, the annual report said.
A persistent capacity crunch due to slow re-introduction of belly capacity (aircraft types with combined passenger and freight capacity) from passenger services combined with a higher proportion of time and temperature-sensitive cargo (vaccines) will see a further increase in yields.
“This will contribute to the strong performance in cargo revenues, which are expected to grow,” stated the report.