IATA’s business plan sees PIA making profit by 2026

[hydrabadi_arab]

KARACHI: International aviation firm, IATA Consultancy has presented a business plan for Pakistan International Airline (PIA), which if implemented would see the loss-making state owned enterprise making its operations break even by 2025 and record 3.4 percent profits the next year.


The comprehensive business plan covering the period 2022 to 2026 was presented to Minister of Finance and Revenue Shaukat Tarin and Minister of Aviation Ghulam Sarwar Khan on Tuesday.

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Secretary aviation, secretary finance, secretary EAD, PIA board of directors and members, PIA CEO and senior officers also attended the meeting.

The implementation of the plan would see PIA assets going up from the current $1.196 billion to $2.183 billion by 2026.

PIA reported a loss of Rs34.6 billion in the financial year 2020. Experts see the losses to have increased significantly in FY2021 because of the pandemic and more importantly the chain of events that ensued following the fake pilot licenses scandal, which saw Pakistani pilots ineligible to fly to US and Europe.

The Ministry of Finance commissioned to prepare the plan last year consequent to the report by the former special advisor to the prime minister on public enterprises reforms Dr Ishrat Hussain.

Dr Ishrat’s report was also termed as a complete restructuring plan for PIA to make it profitable, but also making it a proper business unit, focused on its core operations.

The plan involved financial restructuring to the tune of hundreds of billions of rupees, the officials at the helm of finance ministry and the planning commission demanded a business plan prepared by an international consultant for PIA.

IATA’s consultancy services were hired for that purpose, which after one year has developed a five-year corporate business transformation plan with the current year 2022 as the base year to 2026.

The key points of the business plan encompass, financial restructuring, independent decision making, re-organisation of the company structure, restrictions to core business, financial discipline, HR rationalisation cost controls, review destinations, a fleet planning exercise and network expansion thereby increasing PIA’s network spread and passenger uplift.

PIA’s fleet is expected to grow from the current 29 to 49 by 2026, comprising 16 wide body, 27 narrow body and 6 turbo propeller aircraft. The fleet will be used to expand on current productive routes of UK, Saudi Arabia, UAE and Gulf sectors as well as be operated on identified markets of Baku, Hong Kong, Istanbul, Kuwait, Tehran, Urumqi and Singapore.

Resultantly PIA’s passengers would grow from 5.2 million per annum to 9.0 million per annum, and revenues would grow to $1.7 billion per annum by 2026. These initiatives would help the carrier achieve break even by 2025. PIA, which currently operates 359 round trip flights per week, would be operating 581 round trip flights at the end of the programme.

As GDP and traffic recovery bounce back, propensity to travel should follow, expecting to recover 2019 levels by 2024. According to IATA traffic forecasts for Pakistan, compiled by Oxford Economics, domestic traffic is expected to recover faster than international, coming back to 2019 level by 2022 and 2024, respectively. For this reason, the domestic market should be a priority for PIA in the short- and medium- term.

The outlook also takes into account the global aviation scenarios and challenges, most specifically the Covid-19 pandemic related travel restrictions and reduced demand, and the macro environmental and economic challenges faced by the country.

However, the plan has been made conditional to certain factors, most important of which is the commitment by the government of Pakistan to undertake the financial restructuring of PIA for the legacy debt on its balance sheets and which are beyond the serviceable capacity of the airline.

This would also ease the burden on its cash flows, enabling it to undertake product improvements initiatives, critical for its long-term sustenance.

The plan also urges the government to ensure compliance to the National Aviation Policy, providing a level playing field to the Pakistani carriers.

IATA is of the view that PIA may be run under private management rules, also pertaining to the procurement practices.

It also suggests that external influence on company matters may be curtailed and consistent public scrutiny scaled back as it not only hinders the critical corporate responsibilities of the managers, but also creates negative public relations for the company.

Tarin appreciated the consultant for the comprehensive report. He emphasised that PIA was a national flag carrier, and needed to be a world class airline. He added that the present government believes in reviving and regaining the past glory of PIA and making it a profitable going concern.

He further stressed to focus on the Pakistani diaspora, better customer services and consider the possibility of direct flights in the business plan to make PIA a flourishing organisation that might contribute for economic development of Pakistan and serve communities at home and abroad.

The PIA’s share price increased by 6 percent to Rs4.27 on Tuesday.

IATA’s business plan sees PIA making profit by 2026

KARACHI: International aviation firm, IATA Consultancy has presented a business plan for Pakistan International Airline , which if implemented would see the loss-making state owned enterprise making...

www.thenews.com.pk

 

[JawadKKhan]

This organisation is in loss for decades. This plan is just another excuse to fund it for 5 more years. With current man power it will never go into profit. There are lot of political inductions in it. There were hundreds of employees with fake degrees and there could be still many. Employee to aircraft ratio in PIA is ridiculous.

So this expensive "plan" is suggesting to invest further into lost cause and still for next 5 years do not expect any profit! Such a pain in A for the tax-payers money.. PIA, Railway, steelmills and more.. whichever comes under shadow of "sarkari" officers cannot out perform today's world highly efficient private sector environment. These orgs needs to be privatized.

Political parties have abused govt departments by inducting their workers in masses in these organisations.. As this ensures salaries for workers from tax-payers money. Govt should have only essentials functions, otherwise they will eat all the tax and will still unable to function.. (as happening to Pak now)..

 

[Pakistansdefender]

This organisation is in loss for decades. This plan is just another excuse to fund it for 5 more years. With current man power it will never go into profit. There are lot of political inductions in it. There were hundreds of employees with fake degrees and there could be still many. Employee to aircraft ratio in PIA is ridiculous.

So this expensive "plan" is suggesting to invest further into lost cause and still for next 5 years do not expect any profit! Such a pain in A for the tax-payers money.. PIA, Railway, steelmills and more.. whichever comes under shadow of "sarkari" officers cannot out perform today's world highly efficient private sector environment. These orgs needs to be privatized.

Political parties have abused govt departments by inducting their workers in masses in these organisations.. As this ensures salaries for workers from tax-payers money. Govt should have only essentials functions, otherwise they will eat all the tax and will still unable to function.. (as happening to Pak now)..

Thats a looser mentality. Somehow penetrated in all of Pakistan. We are somehow suspious of trying anything new and always expect it to fail.
The airlines has cut short half of its force. Now it has same number of people per plane as other airlines.

 

[Falconless]

PIA needs to be profitable BEFORE it’s privatised. Nobody will buy an unprofitable airline, especially one this small.

 

[JawadKKhan]

Thats a looser mentality. Somehow penetrated in all of Pakistan. We are somehow suspious of trying anything new and always expect it to fail.
The airlines has cut short half of its force. Now it has same number of people per plane as other airlines.

LMAO! same retarded approach!

Doing same thing over & over again and expecting same results

Ok go ahead & try it for next decade as well Fund it again as tax-payer money has no value?

BTW! privatizing would be anything new!.

PIA needs to be profitable BEFORE it’s privatised. Nobody will buy an unprofitable airline, especially one this small.

Ideally. not really practical imo. Needs to do radical changes / lot of man power needs to be adjusted. Not have to fully privatize, but major shares should be with private company.. In our environment, only private companies can make brave decisions to reduce unnecessary man power and make everyone work.

Wherever there is Sarkari naukri / pakki naukri concept its hard to implement such stuff.

 

[R Wing]

This organisation is in loss for decades. This plan is just another excuse to fund it for 5 more years. With current man power it will never go into profit. There are lot of political inductions in it. There were hundreds of employees with fake degrees and there could be still many. Employee to aircraft ratio in PIA is ridiculous.

So this expensive "plan" is suggesting to invest further into lost cause and still for next 5 years do not expect any profit! Such a pain in A for the tax-payers money.. PIA, Railway, steelmills and more.. whichever comes under shadow of "sarkari" officers cannot out perform today's world highly efficient private sector environment. These orgs needs to be privatized.

Political parties have abused govt departments by inducting their workers in masses in these organisations.. As this ensures salaries for workers from tax-payers money. Govt should have only essentials functions, otherwise they will eat all the tax and will still unable to function.. (as happening to Pak now)..

It's not suggesting blindly investing. As a McKinsey report did before it, it first and foremost must be suggesting deep restructuring, including the ouster of hundreds (thousands?) of political inductees and ridiculous perks that various stripes of 'officials' have kept for themselves.

What Pakistan needs to do (on various fronts) isn't rocket science --- but how one can get our power mafias to do the required things is.

 

[Tshering22]

It's not suggesting blindly investing. As a McKinsey report did before it, it first and foremost must be suggesting deep restructuring, including the ouster of hundreds (thousands?) of political inductees and ridiculous perks that various stripes of 'officials' have kept for themselves.

What Pakistan needs to do (on various fronts) isn't rocket science --- but how one can get our power mafias to do the required things is.

It is the one thing that your PM Imran Khan could do first. Correct me if I am wrong, but isn't PIA under the Department of Aviation under the Prime Minister's Office? This mean your PM is the boss of the department and can actually initiate the restructuring faster than the time we took to get Air India privatized (aviation is a separate ministry for us).

PIA is losing out a lot of cargo revenue. Bulk of perishable cargo from Pakistan is taken by Gulf airlines like Emirates, Etihad, Qatar, Royal Jordanian or Oman Air. Other big names include British Airways, China Southern, Cathay, etc. It gets weirder; if you check your aviation statistics, you will see that Gulf airlines take your cargo for even Far Eastern destinations like China and Japan (wherever JAL or China Southern are not there).

Aviation restructuring is the easiest win that IK can get right now.

 

[R Wing]

It is the one thing that your PM Imran Khan could do first. Correct me if I am wrong, but isn't PIA under the Department of Aviation under the Prime Minister's Office? This mean your PM is the boss of the department and can actually initiate the restructuring faster than the time we took to get Air India privatized (aviation is a separate ministry for us).

PIA is losing out a lot of cargo revenue. Bulk of perishable cargo from Pakistan is taken by Gulf airlines like Emirates, Etihad, Qatar, Royal Jordanian or Oman Air. Other big names include British Airways, China Southern, Cathay, etc. It gets weirder; if you check your aviation statistics, you will see that Gulf airlines take your cargo for even Far Eastern destinations like China and Japan (wherever JAL or China Southern are not there).

Aviation restructuring is the easiest win that IK can get right now.

(1) Impressed (and surprised) by your interest in and knowledge of the Pak aviation industry. May I ask what sparked this interest?

(2) I agree.

 

[S.Y.A]

including the ouster of hundreds (thousands?) of political inductees and ridiculous perks that various stripes of 'officials' have kept for themselves.

Yes and yes. should reduce manpower to 90-100 per aircraft, it will reduce a lot of overhead. and go the PTCL route with it i.e, hand over 20% shares to a private company, and that will be the controlling share, so they are free to make their decisions. it will be a win-win, govt will get the income from taxes as well as a significant share in profits.

Also, what Tshering22 pointed out, Gulf airlines are bleeding us dry, need to reclaim that business, and at least, offer cheaper rates for domestic travel.

 

[Deltadart]

PIA will never go anywhere, as long as government keeps interfering in its affairs and run it as another disfunctional government department.
It seems like PIA has absolutely no plans for resuming its New York service. The resumption of this service should be contingent upon Pakistan government securing the rights to fly non stop to the US. Then other things can be sorted out, otherwise PIA won't be able to compete against the gulf carriers. Non stop flights from Pakistan to New York city is something other carriers can't do, and that's PIAs ace in the hole.
Pakistani Americans would like nothing better than to have daily direct service from New York to Pakistan. People are tired of going through Dubai, Doha, Europe etc.

 

[Olympus81]

Loss making LSEs have been privatized successfully in the past.

PIA should be offloaded along with all its asset. The state has no business running an airline.

 

[Thevilone]

It is the one thing that your PM Imran Khan could do first. Correct me if I am wrong, but isn't PIA under the Department of Aviation under the Prime Minister's Office? This mean your PM is the boss of the department and can actually initiate the restructuring faster than the time we took to get Air India privatized (aviation is a separate ministry for us).

PIA is losing out a lot of cargo revenue. Bulk of perishable cargo from Pakistan is taken by Gulf airlines like Emirates, Etihad, Qatar, Royal Jordanian or Oman Air. Other big names include British Airways, China Southern, Cathay, etc. It gets weirder; if you check your aviation statistics, you will see that Gulf airlines take your cargo for even Far Eastern destinations like China and Japan (wherever JAL or China Southern are not there).

Aviation restructuring is the easiest win that IK can get right now.

PIA cannot be made profitable udner any circustances. The competition is severe and other airlines have gone lightyears ahead.
Pakistan does not have large business houses with airline industry experience like India does, like Tatas, Wadias(Jinnah's great-grandson)etc.

 

[Baburfromsarmarkand]

The brand is tarnished and has NO chance of ever being a tourist airline like Emirates, Air Turkiye. It can only serve as an airline for workers from the middle east who want the lowest fares. Anyone who can afford better goes to Emirates or Saudia. Its bad service, old aircraft, and most importantly, horrible crash record.

Better to accept defeat than keep the taxpayers on the hook for ur false pride. Sell or shut it down. Nothing operated the govt ever becomes profitable lol. The govt itself is seeking handouts.