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| April 8, 2003 | Tuesday | Safar 5, 1424 |
Corporate profile
KARACHI, April 7: On Monday, Pakistan International Airlines Corporation (PIA), announced financial figures for the year ended December 31, 2002, posting pretax profit in the sum of Rs2.11 billion, equivalent to $36 million. The profit emanating, less from increase in revenue and more through cut in costs and expenditures.
The accounts for the year were approved by the Board on Thursday, April 4, but announced at the stock exchange on Monday, April 7. Profit for the latest year enabled the airline to reduce 20 per cent of the accumulated losses on its balance sheet, from Rs12.85 billion, to Rs10.27 billion.
The airline’s return to profitability did not generate much of warmth as the stock slipped 0.65 paisa to Rs8.60, from the overnight level of Rs9.25. PIA’s latest results compared well with last year, when the airline had suffered a staggering loss of Rs1.88 billion at the pretax stage and Rs2.21 billion, after tax. Profit after tax for the latest year ended December 31, 2002, stood at Rs1.87 billion. For the year under review, earning per share worked out at Rs4.10, compared with loss per share of Rs5.91 last year.
The board of directors have called the annual general meeting of shareholders on April 30. The significant feature of the accounts of the airline for the latest year was the reduction in costs and expenditure by Rs5.15 billion or 12 per cent to Rs38.10 billion, from Rs43.24 billion last year. Revenue, in comparison improved only marginally by 0.2 per cent or Rs66 million to Rs43.67 billion, from Rs43.61 billion.
The Annual Report of directors would have to be awaited to see on what accounts the airline managed to trim costs and expenditures. It would also be interesting to learn how the airline managed to improve — even if slightly — its revenue, in a year when major global airlines have been flying uneasily in clouds of financial crisis. And many have already grounded to a halt.
The major claim on revenues for PIA, as in the previous years, was the financial charges. These stood down by 9.6 per cent or Rs250 million to Rs2.35 billion, from Rs2.60 billion the year ago. Another interesting item was the “other provisions and adjustments”, which stood at a huge Rs1.40 billion for the year under review, from Rs263 million the earlier year. The components would have to be noted to learn the reasons of higher provisions for the year under review.
Paid-up capital of PIA stood at Rs6.82 billion, up from Rs3.88 billion last year. The airline carried reserves of Rs4.13 billion on its balance sheet. For the shareholders in PIA, however, the bottomline remains of prime importance. They would be anxious to know when the airline would be able to wipe out the debris of past deficit and resume the payment of dividend.
PIA does not appear to have disbursed a cash dividend to the shareholders for a long time; the last payout was a bonus issue, one-for-ten (10 per cent) in 1994. The airline would still have to wipe out the dark red of Rs10 billion, from its balance sheet, which also is saddled with considerable long and short term debts.
Long-term loans increased by around Rs3.06 billion to Rs3.33 billion at the end of December 31, 2002, from Rs0.27 billion at same time last year. Short term loans also rose by Rs4.71 billion to Rs12.35 billion, from Rs7.65 billion. All of that would place debt servicing again on the staggeringly high side and claim a huge share of revenue and earnings.
Trade debts at the end of the year under review amounted to Rs3.37 billion, up from Rs3.05 billion the year ago. Other receivables also increased to Rs2 billion, from Rs1.88 billion. Cash and bank balances amounted to Rs4.54 billion at the close of the review year, compared with Rs2.17 billion at the same time in 2001.
But because of larger short term debts and their maturity and some Rs15.61 billion of creditors, accrued expenses and other liabilities, current ratio worked out at not-too-comfortable 0.48:1. At December 31, 2002, the total assets of PIA stood at the book value of Rs43 billion, which in dollar terms were valued at 732 million.
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