RAWALPINDI, Dec 12: The Pakistan International Airlines’ Board of Directors here on Wednesday approved Rs51.811 billion budget for the national flag carrier for the fiscal 2002.
Managing Director PIA Ahmed Saeed while presenting the budget before the meeting projected a profit of Rs2.427bn during the next year. According to the provisional figures presented before the Board the airline sustained Rs2.085bn losses during the year ending December 2001.
The budget projections for the year 2002, he said, reaffirms managements’ resolve to put the airline on the path of sustainable profitability and growth.
The profit target of Rs2.427bn would be realized through revenue enhancement with a “restricted” increase in expenditure. The next year’s target, the MD said, will be achieved through product improvement, better service, fleet renewal, manpower rationalization and image restoration.
The profit expectation is after absorption of interest cost of Rs2.3bn on Term Finance Certificates (TFCs) and short term loans.
The revenue generation under the budget projections is expected to increase by Rs4.703bn from last year’s Rs47.108bn to Rs51.811bn, whereas the expenditure would go up by Rs191 million from Rs49.193bn last year to Rs49.384bn. The projected revenue increase over the last year is 10 per cent, while expenditure would rise by 0.4 per cent.
The seat factor has been projected to increase to 72.1 per cent against last year’s 67.3 per cent.
According to the break up of the revenue sources, the PIA expects to earn Rs41.403bn from scheduled flights; Rs2.260bn from Hajj operations; Rs190 million through mail handling; Rs5.258bn as freight charges; Rs1.198bn from excess baggage and non-transport services to fetch Rs1.502bn.
The expenditure head of the budget has been divided into direct operating cost Rs36.814bn and indirect fixed cost of Rs12.570bn.
During the first half of year 2001, the national flag carrier sustained an operating loss of Rs2.285bn, whereas after the introduction of the business plan it is being expected that an operating profit of Rs200 million would have been earned.
The meeting was informed that the past six months, particularly after Sept 11 events, had been very difficult for PIA because of the huge insurance cost.
The government bailed out PIA by indemnifying the National Insurance Corporation.
Besides there was decrease in the outbound number of passengers by almost 20 per cent because of the visa restrictions introduced by different countries and the hostile working environment for Pakistanis in overseas countries.
The operating cost increased after the beginning of allied forces attacks against Afghanistan as planes flying to and from Europe and the United Stated had to fly an extra hour to avoid Afghan airspace.