Pakistan International Airlines has seen an increase in its accumulated losses. In the last 6 months alone, its losses have increased by 7.3% to Rs.282.20 billion since June 2016.
An official of the company revealed that PIA had not stopped flying to Europe and the United States even though the routes cost them a lot. “We are flying to New York and from Karachi to the UK in loss,” the official said.
The official did not specify whether flights to Canada and from Lahore and Islamabad to cities in the United Kingdom were in profit or loss but did say that they were doing relatively better.
The Interior Minister, Chaudhary Nisar Ali Khan, had stated some time ago that one reason for these losses could also be due to a wide-body aircraft that PIA got on wet lease from Sri Lankan Airlines, which also includes staff. The rent for both the plane and the hour was pretty high, with $8100 per hour to be paid to Sri Lankan Airlines.
Furthermore, the PIA official also revealed that the air carrier has lost a large chunk of their business on domestic routes, that have been taken up by international airlines. This has been made possible under the open skies policy.
“The government has allowed Gulf carriers, particularly of the UAE, to operate to and from multiple airports in Pakistan under the open skies policy, which causes massive losses to PIA.”
Currently the airline is in the process of re-evaluating its business plan so that it can function in the given business environment.
If it works in accordance with the new plan, the airline may reduce the number of flights it has on international routes that are creating such a huge loss for them. This doesn’t mean that they will stop flying to those destinations altogether but will operate from only one domestic airport rather than several.
“We may transport passengers from different parts of the country to one airport (e.g. Karachi) and then take them to their international destinations,” the official explained.
The state airline reported loss of Rs.20.70 billion during the Jan-Jun 2016 time period. This was 62% more than the loss they had reported in the same period for 2015 at Rs.12.76 billion.
The profit and loss account was sent to the Pakistan Stock Exchange (PSX) which quoted a loss per share increase from Rs.2.58 to Rs.3.96 (for A Class ordinary share) and from Rs.1.29 to Rs.1.98 (for B Class ordinary share).
Even with all this the airline’s stock price increased from Rs.0.18 to Rs.7.55 with 2.66 million shares available at the exchange.
However, the net revenue declared by the company fell from Rs. 52.47 billion to Rs. 48.16 billion in just six months.