New Pakistan International Airlines(PIA) chairman Shahid Khaqan Abbasi has set about a clean sweep of the carrier's finances, taking heavy write-offs in the latest 1996/7 accounts and pledging to "restore operational and financial discipline".
The accounts, which show a heavy Rs4.8 billion ($110 million)net loss in the year to June, are accompanied by a characteristically forthright attack from Abbasi on past mismanagement. "This crisis situation has been reached as a result of years of complacency, loss of direction, neglect of the customer, inadequate investments in core activities and heavy investments in non-core businesses," he says.
Abbasi, a well-placed politician in Pakistan, took up the reins at PIA in May, with the promise of swingeing cost cutting and the sale of non-core operations. The latest account includes provisions of Rs3.6 billion to cover the write-off of obsolescent spares holdings, a series of bad debts and to settle disputed claims, as well as a hefty sum to cover pension liabilities and early retirements.
Financial charges also mushroomed, hit by the steady fall of the rupee against the US dollar. That resulted in exchange-rate losses of Rs259 million. Operations also slipped to a loss of Rs77 million, compared with a Rs354 million profit the year before, largely as a result of a near 36% rise in the bill for fuel, also priced in US dollars.
Abbasi reports, however, that the airline's underlying cash position has already begun to improve and promises that outstanding finance commitments on the airline's six Airbus A310-300s and Boeing 737-300s will be met from cashflow. Consultants are working on a plan to improve aircraft operations and to draw up a three-year fleet-replacement programme.
Source: Flight International
