THIS week the Supreme Court was informed by the national carrier’s own counsel that PIA’s accumulated losses have risen to Rs119bn. This is a staggering figure even though it has been at least eight years in the making. In the nine-month period running from January to October 2012, PIA posted a loss of over Rs22bn, which had been Rs19bn in the corresponding period the previous year. The airline’s losses began in 2004 and have gathered momentum ever since, in spite of sharp increases in the cost of travel. The present authorities, through their counsel, have told the Supreme Court that they will not accept responsibility for the failures of past managements, thus implying that since the accumulated losses were largely incurred by previous PIA managements, no explanation will be provided for them today.
This is a deplorable attitude. Ever since the current losses started becoming apparent, the airline has been serving up one excuse after another to explain them away — all the while increasing passenger fares sharply. Last year’s annual report, for instance, blamed the losses on factors like “slow economic growth in developed economies” and “the Gulf countries, natural disasters and continued global recession” and the depreciation of the rupee. The latest quarterly results, filed in October from where the carrier’s counsel took the figure of Rs119bn in accumulated losses, add “turmoil in the Middle East, uncertainty about eurozone economies, stress on Pak-US relations” to the list. This is an old trick that managements typically use to explain their poor performance as they hide from the headlines. The board of directors has a duty to ask the necessary questions that cut through this fog of hype and zero in on the main issue: why are operating losses mounting in spite of passing the costs of rising fuel prices to the passenger? The fact that PIA has been able to include such diverse and frivolous reasons in its annual reports shows that the board of directors has not been doing its job of properly monitoring the management’s performance. Perhaps the Supreme Court should ask the board to explain.