Scribd
Upload
200 views

Pakistan International Airlines

This document summarizes financial and operational issues facing Pakistan International Airlines from 2005-2010. It shows that PIA experienced significant losses each year due to factors like high fuel costs, overstaffing, union interference, and inconsistent pricing. Recommendations include increasing fuel hedging, restructuring operations and workforce, and enhancing marketing across PIA's business units. A 2010 deal with Turkish Airlines was projected to reduce costs but also led to protests and losses.

Uploaded by

Bahawal Shahryar Khan
Copyright
© Attribution Non-Commercial (BY-NC)
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
200 views

Pakistan International Airlines

This document summarizes financial and operational issues facing Pakistan International Airlines from 2005-2010. It shows that PIA experienced significant losses each year due to factors like high fuel costs, overstaffing, union interference, and inconsistent pricing. Recommendations include increasing fuel hedging, restructuring operations and workforce, and enhancing marketing across PIA's business units. A 2010 deal with Turkish Airlines was projected to reduce costs but also led to protests and losses.

Uploaded by

Bahawal Shahryar Khan
Copyright
© Attribution Non-Commercial (BY-NC)
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
You are on page 1/ 12

PAKISTAN INTERNATIONAL AIRLINES

Bahawal Shahryar
Rizwan Javaid
Sohaib Zaheer Butt
Ahmed Zain-ul-Abideen
Muhammad Zahid
Ali Haider
OVERVIEW
• Pakistan International Airlines- 1955

• Golden years of PIA (1959-65)

• Boeing, Fokker jets and Sikorsky helicopters-1962

• Military support.

• Expansion continued in 1970s.

• Hajj and Umra Services at a massive scale to enhance


revenue-1990s
SBUs at PIA

43
aircraft

Rs 107531million
Revenue, 2010
FINANCIAL HIGHLIGHTS
2005 2006 2007 2008 2009 2010

Net (4411) (12763) (13398) (36138.84) (5822) (20785)


Profit/(loss)
in million Rs

N.P Margin -6.89% -18.08% -19.01% -40.22% -6.16% -19.3%

Operating 67076 79164 76415 120499 98628 106811


Expenses in
million Rs

Debt to Asset 0.86 1.00 1.09 1.23 1.13 1.10


Ratio

Market Price 11.6 7.74 11.3 3.17 3.40 2.16


per Share
FINANCIAL INEFFICIENCIES
• Only 20% hedging in fuel prices; fuel being 42% of
total operating costs 2010.

• Continuous increase in short term borrowings due


to fuel price-led operating loss.

• Exchange losses

• An un equitable financial base-89.1% state owned.


ADMINISTRATIVE COSTS
• Overstaffing - 1:418 employee to aircraft ratio with 18019
employees.

• Ideal according to international standards 1:150.

• Political intervention in recruitment.

• Employee Housing scheme, utilities, allowances, and pre-


requisites on massive scale ( 1900 apartments in next two
years over 10 acres of land, says Ch Ahmed Mukhtar).
CULTURE IMPACTING OPERATIONS
• Unionism at PIA affecting operational decisions.

• Crew selection for foreign flights taking place based


on union memberships.

• Scandals with employees selling tickets to ordinary


passengers and pocketing the money.

• Signs of corruption and fraud in the procurement


and maintenance departments.
• PIA banned from using its aging Boeing 747 and
Air Bus 310s- 2007-08 – on EU airports.

• PIA had to slash its flights by 50% to EU and US


after the ban, resulting in significant loss of
revenue.

• “When these small things can’t be maintained,


how one is supposed to trust the safety of that
airline’s aircraft,” Tariq Kirmani, Chairman (2007)
MARKETING AND REVENUES
• 91% revenue from passenger. Less focus on
SPEEDEX and PIA engineering as potential
sources of revenue.
• Little promotional spending and Ads to attract
particularly foreign customers for all 4 SBUs.
• Absence of proper planning w.r.t Hajj and
Umra packages with small travel agents
sucking the greater margins.
• Pricing strategy inconsistent.
• MNAs and MPAs getting free tickets.
TURKISH AIRLINE DEAL AND PIA EMPLOYEES

• More than Rs 250 million of direct losses in


four days.
• The deal would have reduced operational
costs and helped earn 20% on each ticket
beyond Turkey.
RECOMMENDATIONS
• Relaxing the ceiling on hedging for oil.
• Moving towards new sources of financing.
• Restructuring.
• Workforce utilization.
• Enhanced marketing strategy to gain from all
four SBUs.
REFERENCES:
1) Financial Report PIA- 2010
2) Financial Analysis PIA 2005-10, Business Recorder.
(http://finance.kalpoint.com/highlights/corporate-news/airline-pakistan-
international-airlines-analysis-of-financial-statements-c-year-2005-1h-
2010.html)
3) Article : PIA – Broken Wings by Amir Zia, March 2011, News Line
(http://www.newslinemagazine.com/2011/03/pia-broken-wings/)
4) ‘Standing firm: PIA boss defends Turkish Airlines deal’ by Salman Siddiqui
(The Express Tribune) Jan 15, 2011.
5) Strategic Analysis of PIA
(http://www.docstoc.com/docs/40113483/strategic-analysis-of-PIA)

6) PIA seeks state bail out, Dawn News-


http://www.dawn.com/2010/11/12/pia-seeks-state-bail-out-to-
survive.html
7) Articles from News Papers and Magazines.

You might also like