1|Page

Contents
Acknowledgement:......................................................................................................................................3
PIA:..............................................................................................................................................................5
History:........................................................................................................................................................5
Pre-Partition:...........................................................................................................................................5
Post-Partition:..........................................................................................................................................5
1960s:......................................................................................................................................................6
1970s:......................................................................................................................................................8
1980s:....................................................................................................................................................10
1990s:....................................................................................................................................................10
2000s:....................................................................................................................................................11
European Union Ban:.............................................................................................................................12
Historical Unbroken Records:................................................................................................................13
Current decade:.....................................................................................................................................14
Fatal Events Since 1970 for Pakistan International Airlines:..................................................................14
Introduction:..............................................................................................................................................16
PIA official logo:.....................................................................................................................................16
Vision.....................................................................................................................................................17
Mission..................................................................................................................................................17
Values....................................................................................................................................................17
 Customer Expectations..........................................................................................................17
 Service......................................................................................................................................17
 Innovation.................................................................................................................................17
 Cohesiveness..........................................................................................................................17
 Integrity.....................................................................................................................................17
 Reliability..................................................................................................................................17
 Safety........................................................................................................................................17
Board of Directors:....................................................................................................................................18
MANAGERS OF PIA:...................................................................................................................................23
PIA ACCOUNTING FRAUDS:.......................................................................................................................24
2|Page

Depreciated engine:..............................................................................................................................24
Embezzlement of tax:............................................................................................................................25
Over employment:.................................................................................................................................26
Disposal of Assets:.................................................................................................................................27
Hajj scam:..............................................................................................................................................28
Ticketing Scam:......................................................................................................................................28
Conclusions:...........................................................................................................................................30
Recommendation:.................................................................................................................................31
3|Page

Acknowledgement:

“It is not possible to prepare a project report without the assistance

and encouragement of other people. This one is certainly no exception.”

On the very outset of this report, we would like to extend my sincere and heartfelt
obligations towards all the personages who have helped us in this endeavor. Without
this active guidance, help, cooperation and encouragement, we would not have made
headway in the project.

We are ineffably indebted to Madam Shumaila CH. for conscientious guidance and
encouragement to accomplish this assignment.

We are extremely thankful and pay gratitude to my faculty “FMS” and Head of
department madam Tasneem Fatima for her valuable guidance and support on
completion of this project in it’s presently.

We extended gratitude to our university “International Islamic University” for giving us

this opportunity.

We also acknowledge with a deep sense of reverence, our gratitude towards our
parents and member of our families, who always supported us morally as well as
economically.

At last but not least gratitude goes to all of our friends who directly or indirectly helped
us to complete this project report.

Any omission in this brief acknowledgement does not mean lack of gratitude.
4|Page

Thanking You

Kainaat Marriam

Sanam Hafeez

Sidra Tariq
5|Page

PIA:
Pakistan International Airlines generally known as PIA; or Pakistan International, is the
national flag carrier and a state-owned enterprise of Government of Pakistan.

History:

Pre-Partition:

Pakistan International Airlines can trace its origins to the days when Pakistan had not
yet came into being and was a part of British India. In 1946, the country’s founder
Muhammad Ali Jinnah realized the need for a flag carrier for the prospective country
and requested financial help from a wealthy businessman Mirza Ahmad Ispahani for this
purpose. Around that time, a new airline ‘Orient Airways’ was registered in Calcutta on
October 23, 1946. In February 1947, the airline bought 3 DC-3 airplanes from a
company in Texas and obtained a license to fly in May of the same year. The airline
started its operations in June, offering services from Kolkata to Sittwe and Yangon. This
was the first post second-world-war airline flight by a South Asian registered airline
company. On 14 August 1947, Pakistan came into being and Orient Airways started
relief operations for the new country. Shortly after Pakistan’s independence from British
India, the airline moved its operations to Karachi.

Post-Partition:

On 7 June 1954, Orient Airways started its operations by offering flight services
between the two wings of Pakistan, i.e. service from Karachi to Dhaka. In addition, the
airline also introduced two new domestic routes, i.e., Karachi-Lahore-Peshawar and
Karachi-Quetta-Lahore. However, due to sustained losses being suffered by the airline,
the Government of Pakistan proposed that Orient Airways merge with a new national
airline. On 11 March 1955, Orient Airways merged with the government’s proposed
airline, becoming Pakistan International Airlines Corporation. The newly formed airline
6|Page

not just offered services on its domestic routes but also inaugurated its first international
route, Karachi-London Heathrow Airport via Cairo and Rome, using 3 newly-acquired
Lockheed L-1049C Super Constellations. The airline continued using DC-3s on
domestic routes in Pakistan. In May 1956, PIA ordered 2 Super Lockheed
Constellations of the latest L-1049H type and 5 Vickers Viscount 815.

At first it was a lot of criticism because the public does not understand or could serve to
justify the need for international route if they think should be given to other projects of
vital importance for a developing country has a higher priority. However, PIA was
focusing and will continue to assist the Pakistani community. The provision of transport
for expatriates is one of the top priorities of the national airline remained. In addition,
PIA earns substantial foreign exchange through international services that it invested in
the purchase of aircraft and spare parts, as the fleet was a grave necessity for the
airline.

Lockheed L-1049C Super Constellation

1960s:

The appointment of Air Marshal Nur Khan as the Managing Director of PIA in 1959
heralded an era of great successes for PIA. In March 1960, PIA wet-leased a Boeing
7|Page

707 from Pan American airlines, thereby becoming the first Asian airline to induct a jet-
aircraft in its fleet. With the newly acquired aircraft, the airline introduced its first trans-
Atlantic route Karachi-New York JFK in 1961. In 1962, it expanded its fleet by placing
orders for Boeing 720s, Fokker F27s, and Sikorsky helicopters. In the same year, one of
PIA’s Boeing 720s made a world record for the shortest duration non-stop flight (6 hours
43 minutes and 51 seconds) from London to Karachi, a record which still holds to this
day. The Boeing 720 was on its maiden flight when it flew from Seattle-London-Karachi
by PIA’s senior Captain Abdullah Baig.  From 1962 to 1966, PIA operated only its
Sikorsky S-61 helicopters for services related to East Pakistan (present day
Bangladesh) due to some technical difficulties. The normal operations on these routes
resumed in 1966 when conditions improved. Upon the establishment of ties between
Pakistan Government and People’s Republic of China, PIA started flying to Beijing in
1964, becoming the first airline of a non-communist country flying to the People’s
Republic of China.

 At the outbreak of Indo-Pakistani War of 1965, the Pakistani Armed Forces seek PIA’s
services for logistics and transport purposes. The Viscounts were phased out in 1966
and were replaced by 4 Hawker Siddeley Tridents. These aircraft were later sold to Civil
Aviation Administration of China.
8|Page

Boeing 720-040B

1970s:

The 70s decade was marked by resumption of transatlantic flights, introduction of new
destinations, appointment of Nur Khan as its executive for the second term, and the
beginning of financially successful period for the airline. When the political situation in
East Pakistan (present day Bangladesh) started deteriorating in early 70s, the Pakistan
Army once again used PIA’s services to airlift soldiers and ammunition to East Pakistan.
Most flights had to detour to Sri Lanka during trips between West Pakistan and East
Pakistan. However, couples of PIA’s cargo planes were shot down by the fighter jets of
Indian Air Force. With the establishment of cordial ties between the Libyan and
Pakistani governments in early 70s, PIA added a new international route, Tripoli, to its
map in 1972. It also signed an agreement with Yugoslav airline JAT. PIA acquired
McDonnell Douglas DC-10s in 1973 and used those planes to replace Boeing 707-
300s. In 1974, PIA launched Pakistan International Cargo, offering air freight and cargo
services. In 1975, PIA introduced new uniforms for air hostesses which were chosen
through an open competition, with the winning entry designed by Sir Hardy Amies, the
designer of Her Majesty Queen Elizabeth II.
9|Page

The latter half of the decade witnessed further expansion of PIA’s fleet with the
introduction of Boeing 747s through either leased or purchased aircraft. During this
decade, airline gained considerable popularity and was regarded as Asia’s best airline.
For the first time since its inauguration, PIA started providing technical and
administrative assistance or leased aircraft to foreign airlines including Somali Airlines,
Air Malta and Yemeni. A subsidiary of PIA also started providing hotel management
services in United Arab Emirates towards the end of the decade.

Boeing 747-282B

A Pakistan International Airlines Airbus A320.

Airbus A320-214
10 | P a g e

1980s:

The 1980s decade began with the opening of a cargo handling center at Karachi airport,
duty-free shops, the first C and D safety checks on its entire fleet, as well as the
introduction of airline’s first Airbus A300B4-203 aircraft. In 1984, the airline introduced
Night-Coach service as a low-cost alternative to day-time domestic flights. In the
following years, PIA Planetarium was inaugurated in Karachi which was followed by
planetariums in Lahore and Peshawar. These planetariums featured retired PIA aircraft
on display for educational or observational purposes. Two more retired Boeing 720B
airplanes were donated to the planetariums in Karachi and Lahore later on. Also in
1985, five new Boeing 737-300s airplanes were introduced in PIA’s fleet, making PIA
the first Asian airline with such diverse aircraft fleet. In late 1987 and early 1988,
services to Malé and Toronto were introduced. In 1989, Shukria Khanam became the
first woman pilot to obtain a license to fly a commercial passenger plane but never
joined PIA as a pilot. A year later, First Officer Maliha Sami became the first female pilot
of PIA when she took-off on Karachi-Panjgur-Turbat-Gwadar route.

In mid-1980s, PIA also helped establish Emirates airline by leasing two of its airplanes –
Airbus 300 and Boeing 737 – as well as providing technical and administrative
assistance to the new carrier.

1990s:

In June 1991, Airbus delivered the first of six Airbus A310-300 aircraft that PIA had
ordered. With the new airplanes, the airline introduced flights to Tashkent in 1992 and to
Zürich in 1993. PIA added Jakarta, Fujairah, Baku and Al-Ain to its destinations in 1994.
In addition, PIA became a client of three different flight-reservation systems, namely:
Sabre, Galileo and Amadeus. Air Safari flights were launched in 1994 using Boeing
737–300 aircraft that used to fly over the Karakoram mountain range. In 1995, PIA
purchased a Boeing 747 flight simulator to train its pilots. It also purchased another
used Airbus A300 aircraft from Air France. A Tupolev Tu-154 aircraft was also leased
11 | P a g e

briefly in 1996 to cope with surge in passenger traffic during summer 1996. Flights to
Beirut were resumed the same year as well.

In 1999, PIA leased 5 Boeing 747–300 aircraft from Cathay Pacific to replace its Boeing
747-200M fleet. The aircraft were painted with a new livery – a handwork Pashmina tail
on white body and large Pakistan titles on the front fuselage. The livery was adopted in
early 90s but due to some copyright issues it had to be dropped. The Boeing 747-300s
remained in the new look but with a plain green tail with PIA titles. The other aircraft in
the fleet were repainted in early 1990s livery.

2000s:

Boeing 747-300 on finals to London Heathrow Airport, England

In July 2002, PIA purchased six Boeing 747-300 aircraft from Cathay Pacific, five of
which were already on lease. The sixth one arrived shortly afterwards and was used
mainly on its North American and European routes. In October 2002, after a period of
ten years without any new orders, the airline placed an order for eight Boeing 777
aircraft from The Boeing Company. The order included all three variants of 777, i.e.
three 777-200ER (Extended Range), two 777-200LR (Longer Range) and three 777-
300ER versions. PIA was the launch customer that revived the Boeing 777-200LR
project that, until then, only had three orders by EVA Air.

Boeing delivered the first of three 777-200ER aircraft to PIA in January 2004. PIA
introduced a new livery for 777-200ERs airplanes and that livery was later applied to
most airplanes of its fleet. PIA also leased six more Airbus A310-300/ET planes from
Airbus company directly. On 3 November 2005, PIA placed an order to purchase seven
ATR42-500 aircraft from ATR to replace its aging fleet of Fokker F27 aircraft. On 6
December 2005, PIA acquired another new Boeing 777-200ER on a ten year lease from
the International Lease Finance Corporation (ILFC). The aircraft was delivered in
January 2007 to the airline.
12 | P a g e

Boeing 777-240ER

On 25 February 2006, Boeing delivered its first 777-200LR Worldliner to PIA, when it
flew from Everett to Islamabad via Manchester. With the induction of long range aircraft
in its fleet, PIA started offering non-stop flights from Toronto to Karachi, Islamabad, and
Lahore from 3 March 2006. PIA had also planned non-stop flights to New York and
other US cities with sizable Pakistani populations but was not given permission by US
authorities. ATR delivered two of the seven ordered airplanes by PIA in May and
December of 2006 respectively, following which the airline ceased using military
Lockheed C-130 Hercules for passenger services in northern areas of Pakistan. The
military planes were being used after the PIA Flight 688 accident. On 23 December
2006, PIA took delivery of its first Boeing 777-300ER.

A pair of Boeing 747s stored at Sialkot in 2008 during the EU restrictions. However,
once the ban was lifted the aircraft were back in use on all routes

European Union Ban:

On 5 March 2007, the European Commission banned all but 7 planes of PIA’s 42-plane
fleet from flying to Europe citing safety concerns of its aging fleet. The ban was imposed
following an on-site visit led by Federico Grandini, European Commission’s Air Safety
13 | P a g e

Administrator. The remaining 7, namely the fleet of Boeing 777s, was exempted from
the ban. PIA claimed that the ban was discriminatory and unjustifiable. On 26 March
2007, Tariq Saeed Kirmani was coerced to resign after severe pressure from higher
authorities because of the EU ban. Zafar Khan was appointed as the new chairman of
Pakistan International Airlines. The ban on the eleven of thirty five aircraft was lifted
after a period of four months on 5 July 2007, following another inspection by European
Union’s Air Safety Administration. Of the eleven aircraft, five were Boeing 747-300s and
the remaining six were Airbus A310-300s. On 29 November 2007, the EU completely
removed the ban and PIA’s entire fleet was permitted to fly to Europe. To avoid any
such embarrassment in future, PIA signed a deal to lease seven new Airbus A320-200
from Kuwait based leasing company ALAFCO. The aircraft were supposed to be
delivered during 2008 and 2009 but the deal was cancelled before any delivery took
place.

Historical Unbroken Records:

In 1962, the forecast upper winds are favorable, stated PIA to break the record for the
FASB flight between London and Karachi. With representatives of FAI (Fédération
Aéronautique Internationale) on board to monitor the official timings, completed the PIA
flight in 6 hours, 43 minutes, 51 seconds, a record that remains unbroken to this day.

In 1964 PIA achieved another historic first seen as a major milestone in the eventful
history of the airline. On 29 April 1964, a Boeing 720B, PIA earned the distinction of
being the first airline from a non-communist country in the People's Republic of China to
fly. PIA first service to China from Karachi to Shanghai via Canton. 1964/65, is
expanding its fleet further with the addition of a fourth PIA Boeing 720B and two Fokker
F-27. Serious development had become reality and the PIA team will take forward
ambitious plans and goals for the national airline.

A collective pride and joyous buoyancy was omnipresent in the PIA family. Riding high
on the crest of success, PIA has been a household name in Pakistan in the mid-sixties.
The war between India and Pakistan, during 1965, another bed of the national airline.
PIA has played an important role in providing logistical support for the armed forces by
14 | P a g e

operating special flights with Boeing, Super Constellation and Viscounts. The founder of
the Nation, had predicted Mr. Jinnah, the Pakistan Air Force would be to support a
civilian airline under special circumstances, must, and this was in evidence during the
war.

In 1966 to link a system of feeder services, eight new points in West Pakistan was
introduced. At that time the airline as Viscounts were inappropriate because of
increases in traffic and had to replace Trident. The airline put the growth curve,
inclusion of two Fokker F-27, two Boeing 707 and a trident in the following year.

Current decade:

In February 2012, PIA ordered 5 more Boeing 777-300ER aircraft with delivery starting
in 2015. The order is worth more than US$1.5 billion. In August 2012, this is announced
that PIA is adding 8 Aircraft in the Fleet. Two 777-200ER, Two Boeing 747-400 and
Four Boeing 737-800 are being added in the Fleet in this year.

Fatal Events Since 1970 for Pakistan International Airlines:

The following events are those involving at least one passenger death where the aircraft
flight had a direct or indirect role. Excluded would be events where the only passengers
killed were stowaways, hijackers, or saboteurs.

1.       5 August 1970; Pakistan International Airlines F27; Islamabad,

Pakistan: The aircraft entered a steep dive and crashed about three minutes after a
night takeoff in poor weather. All four crew members and 26 passengers were killed.

2. 31 December 1970; Pakistan International Airlines F27; East Pakistan: The

aircraft lost altitude and impacted about 300 feet (90 meters) short of the runway.
Seven of the 31 passengers were killed.

 
15 | P a g e

3. 8December 1972; Pakistan International Airlines F27; near Jalot,

Pakistan: The aircraft struck high ground during a flight under deteriorating
weather conditions. All five crew members and 28 passengers were killed.

4. 26 November 1979; Pakistan International Airlines 707-300; near Jeddah,

Saudi Arabia: A fire developed in the rear of the passenger cabin about 18
minutes after takeoff. During the emergency air turn back, the crew was
incapacitated by smoke and fumes and the aircraft crashed about 87 miles (140
km) from the airport. The source of the fire was not determined, but the most
probable source was the ignition of fuel from a portable stove carried by a
passenger. All 11 crewmembers and 145 passengers were killed.

5. 23 October 1986; Pakistan International Airlines F27; near Peshawar,

Pakistan: The aircraft struck the ground about 2.5 miles (4 km) short of the
runway during a night approach. Six of the seven-crew members and 7 of the 47
passengers were killed.

6. 25 August 1989; Pakistan International Airlines F27; near Jalot,

Pakistan: The aircraft was reported missing after a flight through mountain
valleys and poor weather. All five crew members and 49 passengers were
presumed killed.

7. 28 September 1992; Pakistan International Airlines A300B4; near

Katmandu, Nepal: The crew was flying the aircraft was flying an approach about
1600 feet (1000 meters) lower than planned when the aircraft collided with high
ground. The event happened in daylight and with cloud shrouding the mountains.
All 12 crew and 155 passengers were killed.
16 | P a g e

Introduction:
Air transport is given a lot of importance in the world. In Pakistan too, it has
its importance. It is essential to have air communication for maintaining and improving
relations with other countries. Access to some areas of our country is only possible
through airways. Keeping in view the growing industrial and commercial requirements of
the country, it is necessary to develop quick and speedy means of communication

PIA official logo:

PIA or Pakistan International Airline is the first and only state airline of Pakistan.
It is also one of the earliest airlines of South Asia operating since 1955. It has been a
popular airline in the past and so it is at least domestically.

. Once regarded as Asia’s best airline, it is headquartered at Jinnah International Airport

in Karachi and operates scheduled services to 24 domestic destinations and 38
international destinations in 27 countries across Asia, Europe and North America .  Its
main bases are at Karachi, Lahore and Islamabad/Rawalpindi.

The airline’s secondary bases include Peshawar, Faisalabad, Quetta, Sialkot and
Multan, from which it connects the metropolitan cities with the main bases, the Middle
East, Europe, and the Far East. It is primarily owned by the Government of Pakistan
and is placed under the Ministry Of Defense as an autonomous body. It employed
18,043 people as of May 2008.
 17 | P a g e

Vision

PIA's vision is to be a world class airline exceeding customer expectations through dedicated
employees, committed to excellence.

Mission

 Employee teams will contribute towards making PIA a global airline of choice:
 Offering quality customer services and innovative products
 Participating in global alliances
 Using state-of-the-art technologies
 Ensuring cost-effective measures in procurement and operations

Values

 Customer Expectations
Convenience, Caring, and Competitive Tariff

 Service
Personalized and Courteous

 Innovation
Cherishing New Ideas, Translated Into Action

 Cohesiveness
Respect for Individuals, Teamwork, and Effective Communication

 Integrity
Business Ethics, Accountability, and Transparency

 Reliability
Loyalty and Consistency

 Safety
Passengers, Employees, Environment, and Health
18 | P a g e

Board of Directors:

Mr Muhammad Azam Saigol

Chairman, Pakistan International
Airlines Corporation Limited
                                                                                          

Mr Ghiasuddin Ahmed
Director, Pakistan International Airlines Corporation Limited

                                                                                                                    
19 | P a g e

Malik Nazir Ahmed

 
Director, Pakistan International Airlines Corporation Limited
                                                                                                                    

                                                                                            

Syed Yawar Ali

 
Director, Pakistan International Airlines Corporation Limited
                                                                                                                    

                                                                                            

  Mr Atif Aslam Bajwa

20 | P a g e

Director, Pakistan International Airlines Corporation Limited

                                                                                                                    

                                                                                              

Mr Muhammad Irfan Elahi

  Federal Secretary Aviation Division & Director, Pakistan International
Airlines Corporation Limited
                                                                                                                    

Mr Muhammad Arif Habib

 
Director, Pakistan International Airlines Corporation Limited
21 | P a g e

                                                                                                                    

Mr Aslam Khaliq
 
Director, Pakistan International Airlines Corporation Limited
                                                                                                                    

Dr. Waqar Masood Khan

  Federal Secretary Finance & Director, Pakistan International Airlines
Corporation Limited
                                                                                                                    

  Mr Yousaf Waqar
22 | P a g e

Director, Pakistan International Airlines Corporation Limited

                                                                                                                    

Mr Younus M. Khan
  Company Secretary-Pakistan International Airlines Corporation
Limited
                                                                                                                    

MANAGERS OF PIA:
Acting Chief Executive Officer
Bernd Hildenbrand

Acting Chief Operating Officer

Capt. Qasim Hayat

Executive Director - Human Resource, Administration & Coordination 

Wing Cdr(R) Raheel Ahmed

Director - Engineering & Maintenance

Maqsood Ahmed
23 | P a g e

Director - Marketing
Khurram Mushtaq

Chief Financial Officer

Nayyar Hayat

Director - Special Projects 

Omar Razzaq

Acting Director - Airport Services

Aamir Bashir

Director - MRO, Training & EASA-145 and Corporate Planning

Amir Ali

Director - Safety & Quality Assurance

Capt. Naveed A. Aziz

Director - Precision Engineering Complex

AVM Rizwan Pasha

Director - Procurement & Logistics

Air Cdr. Imran Akhtar Khan

Chief Information Officer

Chaudhary Muhammad Azhar Nawaz

Director - Customer Services

Tabassum Abdul Qadir

Company Secretary
Younus Muhammad Khan

Spokesman / GM Public Affairs

Danyal Gilani

PIA ACCOUNTING FRAUDS:

Disposal of Assets:
24 | P a g e

An asset is disposed off when it is fully depreciated. It may give us some benefits
or not but we have to dispose it off. When we dispose off an asset we get the minimum
value in return. But if a person sells an asset of the company without following the
procedure to sell a property it will be considered as fraud. Because Asset of the
company are not the assets of the owner or any related person.

Some aircrafts of PIA are disposed off but these assets were not fully
depreciated and their engines were brand new. They should not be disposed off. This
was an Accounting fraud because no entries of disposing off were made on the financial
statements of PIA.

PIA sold 7 aircrafts some old aircrafts sold with brand new engine and recently
upgraded avionics for a very low price. CEO BERND HILDEN BRAND was responsible
for selling a PIA airplane worth million dollars to Germany for just Rs 5300000 and no
tender or Government authorization was taken before making this deal. They are selling
property of Pakistan without following the procedure to sell any property which belongs
to Pakistan. The market value of PIA plan PK-310 is over a million dollars, but it was
25 | P a g e

sold for just a few million Rupees.

26 | P a g e

This part of the PIA financial statement clearly shows that they have not made the entry of the 7
aircrafts that were disposed off. They did not enter any entry of these transactions. Because it
was sold off without any tender. But no action were taken against them. CEO BERND HILDEN
BRAND

Depreciated engine:
27 | P a g e

Using depreciated engines is not safe at all. It may cause loss of many
precious lives. It is also not good for the financial health of the company because
any accident like crash of the plane

PIA spends 52 % of revenue on fuel cost because of their depreciated engine.

They consume more fuel than other company engines. Obviously PIA has an old fleet,
take out the 777s ATRs the average is around 24 years

No. Fiscal year 2014

(Rs. In billion)
1. Fuel cost (for first quarter) 14.73
2. Fuel cost (for whole year) 55
3. Loss after taxation 1.98
.

PIA use depreciated engines /old engine that causes various accidents and
crash of the plan. They use defected engines. Because of using defected engines many
planes crashes in the history of Pakistan but recently we saw a very tragic event in the
history of PIA.

On December 7, 2016 is an unforgettable day in the history of Pakistan.ATR -42

had crashed due to this 48 people died. Sources say that it was because of defective
engine and 1 engine was totally of working.

The problem is that as these machines used beyond their useful life, they are
fully depreciated and their carrying amount is zero. In accounting terms matching
principle does not work here. The expenses simply do not match with the benefits gain
from these machines.

When an asset is fully depreciated it cost should be detected from the balance
sheet.

Embezzlement of tax:
28 | P a g e

On December 11, 2015, the audit report of Pakistan International Airlines revealed that
millions of rupees were embezzled under the head of airport tax.

Sources told customs today that auditors asked the authorities concerned to trace out
the actual culprits who are behind this scam and recover the embezzled amount from
them .Sources said that Rs 6.2 million embezzlement was made in the airport tax at the
Lahore airport.

Current-for the 346248 379642 115481 112o903

period
Differed 1226683 361637 (37290) (104762)

Balance 1572931 741279 78191 8141

Over employment:

Pia was once a profitable organization, PIA today is in a mess. The major reason for
this situation is overstafifing and hefty salaries . In public sector organizations,when one
once gets a job ,he stays their forever,and PIA is no exception. In doing so, it has not
only multiply its woes but has brought PIA to the brink of total collapse.

Statistics reveal that with over 700 employees per aircraft, PIA leaves Air India and
some other international airlines far behind in the numbers’ game. According to latest
reports, Air India, has drastically reduced its aircraft-to-employee ratio from 300 per
flight to 108, cutting it down by almost two-thirds in the last two years.

Air India’s reduction is impressive when compared to a ratio of 127 per plane at
Lufthansa (38,000 employees: 299 aircraft), 140 at Singapore Airlines (14,000
employees with 100 aircraft) and British Airways 178 employees per aircraft.

Emirates, with a fleet of 212 aircraft, has employee-plane ratio of 220 to one. For
Turkish Airlines, another important regional carrier with 236 planes, it is far lower — at
81 employees per plane.
29 | P a g e

Affects on financial statement:

 Because of overstaffing PIA is facing losses. Their revenues of

2012 are higher than 2011. But there expenses are much higher of
them.

PIA is facing lose from many years .This mean that their revenue is low and expenses
are very high but they are still hiring overstaff.

According to the Board of directors and managers (SBP”S and MR.LONE’’S) say that
PIA employee cost is lowest in the industry. They says that the salary of our employees
is much lower than other companies. While PIA is spending only 17 to 18% of its total
revenue.
30 | P a g e

But in general view the salary of international companies is automatically high because
they 25% salary out of revenue.PIA keep 20000 people for a job that even 8000 can do
in a much better way what are these 12000 people doing in PIA.

NO YEAR 2014 QATTAR PIA

AIRWAYS
1 Total Fleet 162 37
2 Active Fleet 25
3 Employee to Plan Ratio* 240 440
*Employee to plane ratio Based on Fleet

This mean that the ratio of employees to an aircraft is approximately high, on the basis
of active aircraft. This number,as is abundantly clear, is far too high and has an adverse
effect on the efficiency and professional profile of the company..

Hajj scam:

The PIA reported by newspaper “Äl Watan” are mention PIA scandal leaves 20000
stranded in Jeddah as Chairman gets an extention by MA Siddique ..

November 19 monumental miss management by PIA has major humiliation for Pakistan
in Saudi Arabia where more than 20000 Pakistanis pilgrims have been stranded
penniless and clueless after performing Umrah because PIA has bungled big time in
their return flights . PIA normally carries over 50000 passengers for Umrah in the Holy
month of Ramzan every year and this year the number were even higher . The Saudi
Government, according to official issue more than 200000 Umrah visas for Pakistanis
this year “of these 140000 passengers travelled to Jeddah on Saudi, Emirates and
Qattar airline. The rest 60000 booked themselves on PIA although the cost of PIA was
much higher, almost the same as that for London (Rs 39000 or US 650$)”

Ticketing Scam:
31 | P a g e

PIA introduced online ticketing services in 2008 which gained a momentum

during 2009. In line with the industry trends, web ticketing showed a consistent growth
due to expansion in online markets on international routes and aggressive promotions.
Over 60% of all International stations were enabled for web ticketing in 2009. PIA
adopted strict fraud detection and prevention methods through tool developed in-house.
Further, we have achieved an overall 99% conversion to Electronic Tickets issuance in
2009 from conventional paper tickets which is in line with IATA mandate and industrial
standards.

Although PIA adopted many fraud detection and prevention methods, PIA find it
difficult to maintain transactions and was suffering from huge financial losses at the
hands of fraudsters who were involved in the issuance of electronic tickets.

PIA’s IT officer was accused for doing scam of approximately 12 million Rupees while
selling online tickets. This fraud was done from October 2014 to August 2015. IT
officers was arrested and travel agents were investigated and FIA confirmed that the
fraud of 12 million rupees.

South Judicial Magistrate Asif Ahmad extended the physical remand of an accused held
in a case of cyber crime till February 14. 

Police presented the accused and requested for his physical remand in police custody,
maintaining that this would help in the inquiry about his accomplices and the
instruments used in the crime.

Fixed Assets 2012 2011

Property and Plant 146214419 153662065
equipment
Intangible 2973990 3238045
149188409 156900110
Long Term Investment 86088 94394
Receive in respect of 6709487 734496
Centeral Hotel
Long Term Loan 15407 1209
Long term deposit and 9278981 6020026
32 | P a g e

payment
Current Assets
Spare 3892832 4096403
Trade Debt 8936690 10014544
Short Term Loan 329433 2054153
Trade Deposit 1305264 1204634
Other Receivable 2423473 4300365
Short Term Investment 594749 517767
Taxation 93680 102102
Cash 3239943 6303877

In the balance sheet of PIA the e-ticketing scandal affect the revenue of PIA. Because
of it PIA’s loss a lots of cash.

South Judicial Magistrate Asif Ahmad extended the physical remand of an accused held
in a case of cyber crime till February 14. 

Police presented the accused and requested for his physical remand in police custody,
maintaining that this would help in the inquiry about his accomplices and the
instruments used in the crime.

Conclusions:

PIA once was a very profitable organization. It had made many unbreakable
records in the history. But in the recent years we saw that PIA is facing many losses
and unable to get enough revenue. This may have many causes. PIA have done and
still doing many Frauds which include management and accounting frauds. The failure
of PIA may be because of using old and depreciated Assets. Customers don’t want to
travel in PIA because they don’t have more trust on PIA; there is no Guarantee of their
lives.

Failure of PIA is because of overstaffing. They are facing loss from many years
but still they are employing new employees. This affect PIA’s Balance sheet adversely,
33 | P a g e

because there expenses are much more than their revenue. And the worst thing is
these employees are not trained and able for those responsibilities. So they can’t get
the revenue. They also sell new engines in a very low price. And they did not record it
on its financial statements. They were using old engines instead of them which causes
many crashes and lost of lives. These assets were not fully depreciated and was in the
good condition. So, they should not be disposed off.

E-ticketing was a very big scandal of PIA. This scandal causes very bad effects
on the balance sheet because it causes lesser revenue and more expenses. PIA face a
very huge loss in this scandal. Its IT officers were involved in this case.

Recommendation:

1. PIA and companies like this should use fuel efficient planes. So that they
have less expense of fuel.
2. PIA and others should made policies to detect and prevent Frauds of all type
i-e accounting and management frauds.
3. PIA should adopt proper mechanism for reducing loss.
4. PIA should enhance revenue by using following Five strategies.
34 | P a g e

Fleet expansion
Root rationalization
Network expansion
Code share
System automation.
5. PIA should follow financial discipline, debt restructuring and off load aging
fleet for cost reduction.
6. PIA should not hire overstaff because they are already in loss from many
years and should done less expenses and try to get higher revenue.
7. PIA should improve or replace its old fleets that are a threat to Pakistani
people. It will help them getting higher revenue and less expense of fuel.
8. They should use latest technology and find ways to prevent frauds related to
E-ticketing.
9. Customer safety should be guaranteed. And engines should be checked
before take-off to make sure safety of customers.
10. PIA should use latest technology to improve safety backup plan like have
parachutes with every seat, In case of any mishap.
35 | P a g e