Vision

PIA’s vision is to be a world class airline meeting customer expectation through excellent services, on time performance, innovative product and absolute safety

Corporate Mission
Employee teams will contribute towards making PIA a global airline of choice through: Offering quality customer service & innovative products. Using state-of-the-art technologies. Ensuring cost-effective measures in procurement and operations. Developing safety culture.

Core Values
Customer Expectations Convenience, Care and Competitive tariff Service Personalized and Courteous Innovation Cherishing new ideas, translating into actions Reliability Loyalty and Consistency

Safety Passengers, Employees, Environment and Health Cohesiveness Respect for individuals, Team Work and Effective __Communication Integrity Business Ethics, Accountability and Transparency Social responsibility Welfare, Health & Education

HISTORICAL BACKGROUND OF PIA

Birth of a Nation, Birth of an Airline
Air transport has probably never been more important to the development of a new nation than in the case of Pakistan. In June 1946, when Pakistan was still in the offing, Mr. Mohammad Ali Jinnah, the Founder of the upcoming nation, instructed Mr. M.A. Ispahani, a leading industrialist, to set up a national airline, on a priority basis. With his singular vision and foresight, Mr. Jinnah realized that with the formation of the two wings of Pakistan, separated by 1100 miles, a swift and efficient mode of transport was imperative Orient Airways Takes to the Skies On 23rd October 1946, a new airline was born. Initially registered as a pilot project in Calcutta, Orient Airways Ltd. had at its helm Mr. M.A. Ispahani as Chairman and Air Vice Marshal O.K. Carter as General Manager. The new carrier's base remained in Calcutta and an operating license was obtained in May 1947.Four Douglas DC-3s were purchased from Tempo of Texas in February 1947 and operations commenced on 4th June 1947.

The designated route for Orient Airways was CalcuttaAkyab-Rangoon, which also happened to be the first post-war international sector to be flown by an airline registered in India. Within two months of Orient Airways' operational beginnings,

Pakistan was born. The birth of a new nation generated one of the largest transfers of population in the history of mankind.

Orient Airways, along with the help of BOAC aircraft which had been chartered by the Government of Pakistan, started relief operations and transportation of people between Delhi and Karachi, the two capitals. Subsequently, Orient Airways transferred its base to Pakistan and established a vital link between Karachi and Dacca, the two capitals of the two wings of Pakistan. With a skeleton fleet of just two DC-3s, three crew members, and twelve mechanics, Orient Airways launched its scheduled operations. The initial routes were Karachi-Lahore-Peshawar, Karachi-Quetta-Lahore and Karachi-Delhi Calcutta-Dacca. By the end of 1949, Orient Airways had acquired 10 DC-3s and 3 Convair 240s which were operated on these routes. In 1950, it had become increasingly apparent that additional capacity would have to be inducted to cater to the growing needs of the sub-continent.

A New National Flag Carrier for Pakistan Orient Airways was a privately owned company, with limited capital and resources. It could not be expected to grow and expand independently. It was then that the Government of Pakistan decided to form a stateowned airline and invited Orient Airways to merge with it. The outcome of the merger was the birth of a new airline, named Pakistan International Airlines (PIA) on 11 March, 1955.

In activities, and

addition Orient

to

transport had and

Airways facilities

established the nucleus of overhaul maintenance acquired trained pilots, engineers and technicians, these measures proved to be a great asset for PIA during its teething phase. PIA’s First International Service The year 1955 also marked the inauguration of the fledgling airline's first scheduled international service to the glittering, glitzy capital city of London, via Cairo and Rome. Initially, there was much criticism, as the public could not comprehend or justify the need to operate an international route when, in their opinion, other projects vital for a developing country should have been given a higher priority. However, PIA's focus was, and continues to be, to serve the Pakistani community at large. The provision of transportation to expatriates has remained one of the foremost priorities of the national airline. Moreover, PIA earned substantial foreign exchange through international services, which it invested in the purchase of aircraft and spare parts, as fleet expansion was a grave necessity for the airline

New Planes, New Directions, New Management In 1956, orders were placed for two Super Constellations and five Viscounts which were to be delivered in 1959. At this juncture, PIA possessed a small fleet which comprised of Convairs, Viscounts, Super Constellations and DC-3s.

While Mr. M.A. Ispahani was the first Chairman of the new dynamic airline; it was the first Managing Director of PIA, Mr. Zafar-ul-Ahsan, who in his 4 year tenure, got the ball truly rolling and set the shape of things to come. The PIA Head Office building at Karachi Airport, which houses all the major departments of the airline, was the brain-child of Mr. Zafar-ul- Ahsan. In fact, on his departure from the airline, the employees presented him with a silver replica of the building with the caption, "The House You Built".

In 1959, the Government of Pakistan

appointed Air

Commodore Nur Khan as the Managing Director of PIA. With his visionary leadership, PIA 'took off' and within a short span of 6 years, gained the stature and status of one of the world's frontline carriers. In aviation circles, this period has often been referred to as the "golden years of PIA".

Development, expansion, and growth were keywords that the new management was committed to. In March 1960, PIA launched its first Boeing 707 jet service on the London-KarachiDacca, route which later proved to be very successful. This trailblazing accomplishment resulted in PIA becoming the first Asian Airline to operate a jet aircraft, setting trends for the future. In 1961, the airline took on the mammoth task of initiating a crossAtlantic service from Karachi to New York. By this time, PIA had placed orders for more new aircraft, which included Fokker F-27s, Boeing 720Bs and Sikorsky helicopters. Helicopter services in East Pakistan had gained momentum by 1962 and expanded to include Sylhet, Chittagong, Dacca, Comilla and Ishurdi. PIA's helicopter services carried over 70,000 passengers during the first year of operation. At the time, it was regarded as a stellar operation, equal to any other in the world. Unfortunately, due to two mishaps, the service was discontinued in 1966.

Historic Firsts and Unbroken Records In 1962, finding the upper winds forecast favorable, PIA set out to break the record for the fastest flight between London and Karachi. With representatives of FAI (Federation Aeronautique International) on board to monitor the official timings, PIA completed the flight in 6 hours, 43 minutes, 51 seconds, a record which remains unbroken to this day.

In 1964, PIA achieved another historic first, regarded as a major milestones in the chequered history of the airline. On 29th

April, 1964, with a Boeing 720B, PIA earned the distinction of becoming the first airline from a non-communist country to fly into the People’s Republic of China. PIA's first service to China was from Karachi to Shanghai via Canton. In 1964-65, PIA expanded its fleet further with the addition of a fourth Boeing 720B and two Fokker F-27s. Serious development had become a reality and the PIA team continued to move ahead with ambitious plans and goals for the national flag carrier.

A collective pride and a joyous buoyancy was pervasive within the PIA family. Riding high on the crest of success, PIA became a household name in Pakistan in the mid sixties. The war between India and Pakistan, during 1965, further tested the national airline. PIA played a major role in providing logistical support to the Armed Forces by operating special flights using Boeings, Super Constellations, and Viscounts. The Founder of the Nation, Mr. Jinnah had predicted that the Pakistan Air force would need the support of a civil airline in special circumstances, and this came into evidence during the war.

In 1966, a system of feeder services linking eight new points in West Pakistan was introduced. By this time, the airline's Viscounts were proving inadequate owing to traffic growth, and had to be replaced by Tridents. The airline continued up the growth curve, receiving two Fokker F-27s, two Boeing 707s and one Trident in the following year

Style, Glamour, and Charisma Around this time, the airline saw a change in the top slot. Air Vice Marshal, Asghar Khan took over the reigns of PIA for a tenure of 3 years. A number of highpoints are attributed to this period. The most colorful, if not the most significant, occurrence for PIA was the introduction of a new airhostesses' uniform designed by none other than the renowned French designer, Pierre Cardin. Taking the aviation world by storm, this move, more than any other single factor, imprinted PIA's name on the international market. The uniforms were an instant hit, both at home and abroad. The Pursuit of Excellence Through Technology and Quality Control Not content with a number of historic firsts under its belt, PIA made history yet again, by installing Pakistan's first computer, an IBM1401, in 1967. PIA's first Engine Overhaul Shop, located near the Head Office building, was also completed and commissioned around this time. The Ground Training School (GTS) now known as the PIA Training Centre, was first conceived and developed during 1961-62. Interestingly, training was initially imparted in the T-shaped building which has now become the PIA Dispensary, close to the Head Office building.

Besides visible development and growth in traffic and revenues in the sixties, PIA added additional destinations, new equipment, and cutting-edge technology to support its ever expanding operations. A new Jet Hangar for Boeings with a supporting airframe overhaul shop was completed and commissioned in 1968.

In 1970, PIA set up its own Flight Kitchen in Karachi, which caters, even today, to the national airline as well as other carriers. Over the years, with the airline's expansion and increased capacity, the need for a second Flight Kitchen became imperative.

Ushering In a New Era of Growth and Development PIA heralded the nineties by donning a bright new corporate identity. Old-timers may remember the flutter that the earlier green and gold livery had created when it was first introduced in 1974. However, in keeping with the changing times, PIA introduced a smart, sporty 90's look. The familiar PIA green was reinforced with moss green and pale blue stripes were incorporated into the new corporate identity. The stripes, a universal symbol of sport, highlighted PIA's active participation and sponsorship of a diverse range of national games. PIA's players have always been at the forefront of Pakistani Cricket, Hockey,

Squash, Football, Chess, Bridge, Polo and Table-Tennis teams. The nineties also saw the expansion of PIA's massive Haj and Umrah operations to Pakistan's smaller cities, in addition to the major cities of Islamabad, Peshawar, Lahore, Quetta and Karachi.

PIA's growth continues unabated and the airline now operates globally, covering the entire domestic landscape and international destinations spread over 4 continents. Impressive statistics for a comparatively young airline. Since its inception in 1955, PIA has indeed, come a long way.

HISTORIC ACHIEVEMENTS OF PIA
• • •

First airline from an Asian country to fly the Super Constellation. First Asian airline to operate a jet aircraft. First Asian airline to be granted maintenance approval by the US Federal Aviation Administration (FAA) and the Air Registration Board, predecessor of the British Civil Aviation Authority (CAA). First non-communist airline to fly to the People's Republic of China, and operate a service between Asia and Europe via Moscow. First airline in Asia to induct the new technology Boeing 737-300 aircraft. First airline in the world to operate scheduled helicopter services. First airline to show in-flight movies on international routes. The first airline in South Asia to introduce auto-ticketing facility. The first airline in the world to fly to Tashkent, capital of the newly independent state of Uzbekistan.

• • • •

• •

First airline in the world to start Air Safari with jet aircraft. First Asian airline to start flights to Oslo, the capital city of Norway. First airline in the world to induct the Boeing 777-200LR, the world's longest range commercial airliner. First airline in the world to take delivery of the Boeing 777-200LR Worldliner (Longer Range Variant). Pakistan International Airlines Flight Services Department was awarded the ISO 9001:2000 certification award during May 2006. First airline in Pakistan to operate a flight with an all female crew at command and in the cabin. First airline in the world to operate the Boeing 777-200ER, 777200LR and 777-300ER altogether - all the three variants available on the market.

PIA Flight Kitchens in Karachi were awarded the HACCP Certificate. (Hazard Analysis and Critical Conrol Points

BOARD OF DIRECTORS

Ch. Ahmed Mukhtar Minister for Defense and Chairman – PIA Syed Naseer Ahmad Malik Nazir Ahmed Mr Javed Akhtar Lt. Gen (Retd) Syed Athar Ali Federal Secretary Defence Capt. Muhammad Aijaz Haroon Managing Director – PIA Prof. Mian Ijaz ul Hassan Mr Mubashir Iftikhar Mr Husain Lawai Mr Shaukat Ali Rana Mr Salman Siddique Federal Secretary Finance Mr Muhammad Shuaib Secretary-PIA

MANAGEMENT

Managing Director Captain Mohammad Aijaz Haroon Deputy Managing Director Mr. M. Salim Sayani Mr. Salah uddin--> Mr. Anwar Rasool--> Mr. Amir Zafar--> Director Finance & CFO Mr. Faisal I. H. Malik Director - Corporate Planning Mr. Shahnawaz Rehman Director - Engineering and Maintenance Mr. Maqsood Ahmed Director - Flight Operations Capt. Shuja Naqvi Director - Information Technology Mr. Shahid Sarwar Director - Human Resource & Administration Mr. Hanif Pathan Director - Marketing Mr. Imran Ahmed Khan Director - Precision Engineering Complex AVM Muhammad Kamal Alam Siddiqui

Director - Procurement, Logistics and Food Services Mr. Javed Kamran Director - Training and Development Mr. Dilawar Farid Baig Director Mr. S. Kamran Hasan General Manager : Corporate Safety & QA Capt. Salman Azhar Chief Engineer: Engineering QA Mr. Aslam Tariq General Manager: Passenger Handling Services Mr. Syed Aijaz Mazhar General Manager: Ramp Services Capt. S. Bayar Masood General Manager: Management Information Services Mr. Zulfiqar Husain General Manager: Public Affairs Mr. S. Sultan Hasan

Organizational Structure

Total Aircraft 40

No. of Aircraft 6

No. of Aircraft 9

No. of Aircraft 7

No. of Aircraft

12

Domestic Net work – 24 Destinations

International Network - 36+2 Destinations

DEPARTMENTS OF PIAC PIAC Airline has been divided into the following function units.  Network & Route Planning  Administration  Finance  Marketing  Engineering  Flight Operations  Airport Services  Cargo Sales & Services  Precision Engineering Complex  Flight Services  Coordination Network & Route Planning Department This department carries out formulation and implementation of overall corporate plans. This department provides guidelines to each division/department to fix their goals and formulate strategies to achieve them. It has the following subdivisions:  International and Civil Aviation Affairs Division  Economic Planning Division  Fleet Planning Division

Administration Department Administration department is one of the pivotal departments, which is responsible for the administration of human resources and formulation of the corporate personnel policies; it has coordinating and regulatory body, which regulates relationship between management and employees. Further subdivision is as under:  Human Resource Division  Personnel Division  PIA Training Center  Policies and Remuneration Division  Security Services Division  Medical Services Division  Industrial Relations Division  Legal Services Division  Sports Division Finance Department Finance department is one of the biggest departments in the airline, which is responsible for provision of efficient and effective accounting/budget. The feasibility of extending financial, administrative, technical facilities is control by this department. It is also responsible for internal auditor of PIAC. It has further divisions, which are as under:  Planning and Budget

 Funds Management  Accounting  Internal Audit Marketing Department It looks after development of Marketing Plans & Policies. This department performs all marketing functions. Subdivision is given below:  North (KHE) Division  South (KHI) Division  UK (LON) Division  USA & Canada (NYC)  Europe (FRA) Division  Saudi Arabia (JED) Division  Asia Pacific (SIN)  Cargo Sales Division  Market Planning & Services Division  Gulf (DXB) Division  Passenger Sales Division  Reservation & Yield Management Division Engineering Department This department

takes

care

of

planning,

base/line

maintenance and overhauling of whole of the PIA’s fleet. To keep

pace with the new technology, it has a special branch named as “Development Engineering” to meet the future challenges in the sphere of avionics. Following are its further subdivisions:  Planning and Project Division  Quality Assurance Division  Avionics and overhaul Division  Base Maintenance Division  Line Maintenance Division  Development Engineering Division  Power Plant Division  Resource Management Division  North Division Flight Operations Department This department coordinates the training, flight engineering, planning and scheduling of flight operations. It is responsible for all the activities of the flight operation in PIA and ensured central control over all flights. The department has been organized on the following line:  Flight Engineering Division  Standards Division  Central Control Division  Planning & Scheduling Division  Technical Division

 Coordination Division  Training Division  North Division

Airport Services Department Customer Services Department has two subdivisions, which are given blow: Passenger Services Division As the name implies, this division is responsible to provide services to the passengers as well as aircraft at the airport. This subdivision in addition to the Passenger Services also possesses Facilitation & Planning, Technical Ground Support (TGS) and Terminal Services (KCI). Flight Services Division This subdivision provides for provisioning of all in-flight services like food, cabin crew and field services. Coordination Department The purpose of Coordination Department, which is headed by Director Coordination, is to coordinate all matters received through Government of Pakistan. Co-ordination playing very important role in airlines so PIAC as has well established coordination department so it may run it’s business affairs swiftly. Which brings more productivity and positive working relations with the Government departments.

Recruitment and Selection: Recruitment is the discovery of the potential applicants for actual or anticipated positions. The vacancies are created after the approval of the finance department. The PIA recruitment and selection procedures involve the following: i) Recruitment Policy:  The recruitment policy given the following conditions for recruitment:  The age limits for the recruits are between 18-26  The educational qualifications of the employee.  Officers (Executive Category) Master Degree /MBA/MPA /BBA(honors)  (Any recognized University by Federal Govt.)  Assistant Officers/below Category Matriculation to B.A./B.Sc ii) Sources of Recruitment: Whenever a vacant position is available, the head of department make reviews of the existing personnel and carry out a search within the organization for suitable persons before trying the outside sources. But if a person with the required qualifications for a given job is not available, fresh recruitment is made. iii) Techniques of Recruitment: The vacant posts are advertised through the local and national newspapers and applications are invited with the job specification and description showing the job requirements and eligibility. iv) Selection Procedure: The selection process is concerned with the securing relevant information regarding the applicant. The selection procedure uses the screening devices so that the most efficient and professional employees should be available to the organization. The selection procedure in PIAC is based upon three important principles, namely: I. Competence II. Equality of Opportunities

III. Neutrality The following screening devices are used in the PIAC during the selection process. a) Application Blank: Each applicant blank provided by the Admin. Department. The application form has to be filled by the applicant in his own handwriting submitted to the admin dept before a specific date. The format of the application blank is given in the appendix. In the application, the personal data, educational qualifications and experience etc. of the applicant is give. Test: These applications are scrutinized and the candidates passing through the security are called for a written test. The test s conducted by a Board from the Head Office with the assistance of the Administration department at the concerned stations. Interview: Those qualifying the written test are called for an interview administered by the selection board assisted by the administration department. Physical Examination: There is usually a formal physical examination of the candidates. Another requirement is the submission of a formal Medical Fitness Certificate from a doctor. Approval by the Competent Authority: After going through the whole process of selection, the list of recommended applicants is sent to the competent authority for approval. Offer of Appointment: After the approval, the Administration Department notifies the decision to the candidates through a “letter of appointment”. Orientation Period: After appointment, the employees go through an orientation period i.e. Probation, for MBA/MPA/BBA/BPA (honors) as executive the period is 5 weeks. And for employees of underofficer class, the period is 3-6 months. Confirmation:

b)

c)

d)

e)

f)

g)

h)

After successful completion of the orientation period, the employees apply for confirmation to a competent authority.

THE PIA TRAINING CENTRE The PIA raining center at Karachi is possible the only airline training establishment where comprehensive instruction in all major field is given under one roof. PIA has been training its pilots, mechanics, technicians, traffic / sales staff and cabin crew since 1956, but it wasn’t until 1960 that all training facilities were amalgamated at one centralized place and expended to train personnel in all fields of the airline. In October 1975, the training center moved to its new three stories specious premises near the Head Office where it has been able to add more attaching aids. Training facilities available within the airline also include flight Simulators for basic and recurrent training of pilots and other operational crew. In 1992, PIA introduced computer based training (CBT) facility; containing courses are for specific aircraft for training its engineering cabin and cockpit crew. Courses are conducted according to the requirements of the industry and the standards laid down by the civil aviation authority (CAA) of the United States and the international Civil aviation organization (ICAO) al courses are also approved by the Civil Aviation Authority of Pakistan. Deferent courses and training facilities are also offered to public and private sector organization and individuals within Pakistan. Basic and advanced raining facilities are also provided to foreign carriers, and courses in specialized fields are conducted at the center as well as location abroad. Over 40 airlines from Asia, Africa and Europe have used their facilities for the training of their pilots, maintenance engineers and other disciplines. The total number of such trainees exceeds 6,000. Training is also being conducted for African of scholarships granted by the ministry of foreign affairs, Government of Pakistan. In 1994, PIA training center introduced advanced course in Quality management TQM and ISO-9000 certification. It is

planned to develop PTC to receive an ISO-9000 certification in the next one-year. PIA training center was first selected to conduct civil air transport course for developing countries on behalf of government of Pakistan in collaboration with Japan international co-operation agency (JICA) in 1988. PIA has so far conducted eight such courses, in which senior airline and civil aviation officials of 30 countries have participated. In April, 1995 PIA and JICA concluded an agreement to conduct another five such courses in the field of civil air transport management.

FINANCIAL ANALYSIS OF PAKISTAN INTERNATIONAL AIR LINES

CURRENT RATIO
Current Ratio = Current Asset/ Current Liabilities 2009 Current Ratio = 16880.56/68817.62 15039.28/72528.40 = 0.25 2008

0.21

Current Ratio
1.2 1 0.8 0.6 0.4 0.2 0 2009 2008 2007 2006 2005 2004 Years

Ratio

Interpretation Current ratio is less than one only in year 2004 it is above one that’s why currently our asset are not enough to pay our obligation.

Loss per Share = Loss after taxes / No of Shares A Class share of Rs 10 2009 2008 Loss per Share = 5822431/2142060245x1000 36138642/2016835227x1000 Loss per Share = 2.72 17.92 B Class share of Rs 05 Loss per Share = 1.36 8.96

Loss Per Share
5 Loss (Rs) 0 -5 -10 -15 -20 Years 2009 2008 2007 2006 2005 2004

Net Asset per Share

Net Asset per Share
50 40 30 20 10 0 2009 2008 2007 2006 Years 2005 2004

Interpretation For consecutive five years corporation is facing loss it means no earning or share holder only in 2004 share holder earn some money on their share .Although net asset per share are increasing but it does not have any impact because obligation are also increasing.

Rs

Revenue per employee =operating revenue /average no of employee 2009 94563.77 / 17944 x1000000 x1000000 5269938 2008 88863.26/18036 4926994

Revenue per Employee
6000000 Rs 4000000 2000000 0 2009 2008 2007 2006 2005 2004 Years

Interpretation

Corporation’s revenue per employee is increasing which shows that if employee’s efficiencies are increased corporation can achieve more profits

Asset turn over ratio = operating revenue/ total assets 2009 94563765/160013178 0.59 2008 88863258/139669867 0.64

Asset Turn Over Ratio
0.65 ratio 0.6 0.55 0.5 2009 years 2008

Interpretation This ratio is decreasing because of inefficiency of corporation in utilizing its resources well .corporations main assets are its plains air ports buildings& hotel .if we take an example of air port Peshawar air port remains closed because of terrorist attack for long duration and also few air ports are built on political basis which are not yielding as required.

Cash ratio= cash & bank balance/current liabilities 2009 742945/68817616 0.107 2008 789555/72528401 0.0108

cash ratio
0.01085 ratio 0.0108 0.01075 0.0107 0.01065 2009 year 2008

Interpretation Cash ratio shows that in last year corporation was in good position as they have more bank deposits the decline in deposits is because of payments of installments of borrowings &also because of intake of employee sacked out of organization in past.

Fixed asset turnover =operating revenue/fixed asset 2009 94563.77/133647.52 0.71
fixed asset turn over ratio
0.78 0.76 0.74 0.72 0.7 0.68 2009 year 2008

2008 88863.26/115123.49 0.77

Interpretation Fixed asset turn over ratio is also not showing healthy trend as corporation is not utilizing its recourses well many of its air ports &other assets are built on political basis that’s why they are not better source of

ratio

revenue but proving them selves as a burden on corporation s ability to produce profit.

Debt to Asset Ratio = total debts/total assets 2009 2008 7978187/160013178 0.498 5757849/139669867 0.0412

debt to asset ratio
0.06 ratio 0.04 0.02 0 2009 year 2008

Interpretation This ratio shows that corporation is acquiring more debts on their asset which is not healthy sign as this trend can lead an

organization to be washed out of the seen. This is all because of Losses, Corporation facing that’s why they are acquiring more debts to to cover their expense and also to pay out borrowing installments.

PIA PERFORMANCE Before accounting foe debt servicing &exchange losses, the corporation became profitable at operating level after 04 years of operating at loss on a similar basis. The revenue in 2009 went up by 6.4%year on year, whereas yield increased by 7%in 2009 as detailed below Revenue Passenger Freight Others Total 2009 Pkr(million) 84510 4982 5072 94564 2008 Pkr(million) 79479 5459 3925 88863 variance % 6.3 (8.7) 29.2 6.4

Passenger Ask,s(million) Rpk,s(million) Seat factor (%) Passenger revenue(pkr million) Yield factor

2009 19,859 13,891 70.00 84,510 6.1

2008 19528 13925 71.00 79479 5.7

% change 1.70 -0.24 … 6.33 7.0 %

PIA increases its over all capacity by 1.7% while its passenger traffic declined by 0.24%over the last year which caused 1% decrease in seat factor. The closure of Peshawar air port also reduced the number of flights consequently the seat factor. freight Aftk,s(million) 2009 545 2008 547 %(change) -0.44

Rftk,s(million) Freight revenue(million) Yield factor

270 4982 18.4

320 5459 17.1

-15.48 -8.74 7.6%

Freight factor one of the key indicators of economic activities, showed significant decline during the year. This was in line with globally recessionary trends, reflecting decrease in trade activities

BALANCE SHEET COMMON SIZE %
Rs (000) Dec2009 Assets Non current assets Fixed assets Property plant &equipmen t Intangibles Total 1335555 60 1150103 37 9549715 1 83.46 82.34 80.40 Dec2008 Dec2007 Common size% %200 %200 %200 9 8 7

91962 1336475 22 Long term 4446950 investments Long term -advances Long term 5038148 deposits &pre payments Total 1431326 20

113154 1151234 91 4497642 --5009452

103475 9560062 6 4540229 1283000 4098388

0.057 83.52 2.778 -3.14

0.081

0.087

3.22 -3.58

3.82 1.08 0.034 5

1246305 85

1055222 43

89.45

89.23

88.84

Current assets Stores 3987423 &spare parts Trade debts 7978187 Advances 2189162 Trade 1158497 deposits &prepayme nt Accrued -interests Other 799193 receivables Short term 25151 investment Taxation-net Cash 742945 &bank balances Total 1688055 8 Total assets 1600131 78

3726940

3251940

2.49

2.66

2.737

5757849 1418610 1591583

5012778 604470 1023312

4.98 1.36 0.724

4.12 1.015 1.139

4.22 0.508 0.861

1325 1441564 42505 269351 789555

32789 1043971 32093 274519 1975459

-0.499 0.015 -0.46

0.01 1.032 0.030 0.192 8 1.565

0.027 0.878 0.027 0.231 1.663

1503928 2 1396698 67

1325133 1 1187735 74

10.54

10.76

11.15

100% 100% 100%

Interpretation In common size analysis we analyze the data in vertical shape for that purpose largest figure of balance sheet is taken as denominator. Assets analysis of balance sheet shows that in non current assets fixed assets increases every year as they constitute a huge part of total assets. In current asset we can see that trade debts are increasing and cash &bank balance is decreasing .corporation is losing its bank balance as it is not generating profit.

BALANCE SHEET COMMON SIZE %
Rs(000) Dec2009 Equity & liabilities Share capital &reserves Share capital Reserves 2328035 6 7233510 1 Total 4905474 equity 5 Surplus on 2828190 revaluation 3 of fixed assets Non current liabilities Long term 2455311 financing 3 Term 1959232 finance 0 &sukuk certificate Liabilities 6127279 2142301 4 6894543 7 4752242 3 1419270 0 2087807 4 3334364 3 1246556 9 972040 14.54 45.20 30.65 17.67 15.34 49.36 34.02 10.16 17.58 28.07 10.49 0.81 Dec2008 Dec2007 Common size% %200 %200 %200 9 8 7

1947141 6 1243014 3

1703707 5 1072373 8

15.35 12.25

13.94 8.89

14.34 9.028

6502466

4652402

38.29

46.55

39.17

against assets subject to finance lease Long term deposits Deferred liabilities total

7

0

4

365847 6184327

301770 3243205 1004711 89 2794749 6

321547 3049166 7765555 0 2061717 4

0.228 7 3.86 69.97

0.216 2.32 71.94

0.270 2.56 65.38

1196840 4 Current liabilities Trade 2868451 &other 4 payables including provisions Accrued 1845592 interest/ma rk up/profit Provision 848890 for taxation Shot term 2398216 borrowings 0 Current 5328458 maturities of long term financing Term 5120 finance &sukuk certificate Liabilities 8122182 against assets subject to finance lease

17.92

20.00 9

17.36

1475456

978317

1.154

1.05

0.82

--3050006 2 5352528

-1810588 4 5662451

0.53 14.98 3.34 21.83 3.83

--15.24 4.77

---

2523232

---

2.12

7252859

4724495

5.07

5.20

3.98

total

6881761 7252840 6 1 Contingencies &commitments Total 1600131 1396698 equity 78 67 &liabilities

5261155 3 1187735 74

43.00 7

51.92

44.29

100% 100% 100%

Interpretation If we look at the total equity figure we can see corporation is carrying huge figures in the form of loss they are opting for long term finances so that grace period for repaying should be long, deffered liabilities are increasing with every passing year most of the assets including plains are subjected as guarantee in order to get finances mark up on interest is increasing because of the devaluation of local currency.

PROFIT & LOSS ACCOUNT COMMON SIZE %
RS(000) Revenue-net Cost of services Aircraft fuel Others Total Gross profit Distribution cost Admn expense Other provision &adjustment Exchange loss-net Other operating income 2009 94563765 2008 88863258 2009 100% 2008 100%

(31371753) (47257674) (78629427) 15934338 (5911946) (7180665 (689849)

(45854357) (39421454) (85275811) 3587447 (5309808) (5818218) (1807645)

33.17 49.97 83.15 16.85 6.25 7.59 0.7295

51.60 44.36 95.96 4.04 5.98 6.54 2.03

(6711336) 494462

(24118823) (1830920)

7.097 0.522

27.14 2.06

Total Loss from operation1 Finance cost Loss before taxation Taxation Loss for the year

(19999334) (4064996) (9243768) (13308764) 7486333 (5822431)

(35223574) (31636127) (8351648) (39987775) 3849133 (36138642)

21.15 4.29 9.77 14.07 7.91 6.15

39.63 35.60 9.39 45 4.33 40.7

Interpretation In common size analysis of profit & loss account we take revenue as denominator. Profit &loss account Shows Company paid a lot in 2008 in the form of fuel expense as fuel prices were rising in the whole world devaluation of currency is also an important aspect in this regard. In 2009 gross profit figures were high as company generate more revenue and minimizes its expenses although administration expenses rises because of the intake of sacked employee’s again re employed.net losses of 2009 are very much less than 2008 but not enough to put corporation in better condition.

BALANCE SHEET INDEX ANALYSIS
Rs(000) Dec2009 Assets Non current assets Fixed assets Property 1335555 plant 60 &equipmen t Intangibles 91962 Total 1336475 22 Dec2008 Dec2007 2009 2008 2007

1150103 37

9549715 1

139.85 120.43 100 %

113154 1151234 91

103475 9560062 6

88.87

109.35 100 % 139.79 120.42 100 %

Long term investments Long term advances Long term deposits &pre payments Total

4446950 -5038148

4497642 --5009452

4540229 1283000 4098388

97.94

99.06 ---

100 %

122.92 122.22 100 %

1431326 20 Current assets Stores 3987423 &spare parts Trade debts 7978187 Advances Trade deposits &prepayme nt Accrued interests Other receivables Short term investment Taxationnet Cash &bank balances Total Total assets 2189162 1158497

1246305 85 3726940

1055222 43 3251940

135.64 118.10 100 2 8 % 122.61 114.60 100 % 159.16 114.86 100 % 362.16 234.68 100 6 % 113.21 155.53 100 %

5757849 1418610 1591583

5012778 604470 1023312

-799193 25151 -742945

1325 1441564 42505 269351 789555

32789 1043971 32093 274519 1975459

-76.55 78.36 -37.60

4.04

100 % 138.08 100 % 132.44 100 % 98.117 100 % 39.96 100 %

1688055 8 1600131 78

1503928 2 1396698 67

1325133 1 1187735 74

127.38 113.49 100 7 % 134.72 117.59 100 %

Interpretation In index analysis we analyze data in horizontal shape and in this way we analyze our current condition with past. Analysis of asset shows that fixed assets increases as compare to past corporation trade debts increases to run its operation and also there is significant decrease in cash &bank balance as corporation is not generating profit.

BALANCE SHEET INDEX ANALYSIS

RS(000) Dec2009 Dec2008 Equity & liabilities Share capital &reserves Share capital Reserves 2328035 6 7233510 1 Total 4905474 equity 5 Surplus on 2828190 revaluation 3 of fixed assets Non current liabilities Long term 2455311 financing 3 Term 1959232 finance & 0 sukuk certificate 2142301 4 6894543 7 4752242 3 1419270 0

Dec2007

2009

2008

2007

2087807 4 3334364 3 1246556 9 972040

111.50 102.61 100 6 % 216.93 206.78 100 % 393.52 381.23 100 % 2909.5 1460.1 100 4 0 %

1947141 6 1243014 3

1703707 5 1072373 8

144.11 114.29 100 % 182.70 115.91 100 %

Liabilities against assets subject to finance lease Long term deposits Deferred liabilities total

6127279 7

6502466 0

4652402 4

131.71 139.77 100 %

365847 6184327

301770 3243205 1004711 89 2794749 6

321547 3049166 7765555 0 2061717 4

113.78 93.84

1196840 4 Current liabilities Trade 2868451 &other 4 payables including provisions Accrued 1845592 interest/ma rk up/profit Provision 848890 for taxation Shot term 2398216 borrowings 0 Current 5328458 maturities of long term financing Term 5120 finance &sukuk certificate Liabilities 8122182 against assets subject to finance

100 % 202.82 106.36 100 % 144.19 129.38 100 % 139.13 135.55 100 %

1475456

978317

188.65 150.81 100 % ----

--3050006 2 5352528

-1810588 4 5662451

132.46 168.45 100 % 94.10 94.52 100 %

---

2523232

0.20

---

7252859

4724495

171.93 153.52 100 %

lease total

6881761 7252840 5261155 130.80 137.85 100 6 1 3 3 % Contingencies &commitments Total 1600131 1396698 1187735 134.72 117.59 100 equity 78 67 74 % &liabilities Interpretation Corporation’s equity is decreasing, non current liabilities portion shows that corporation is heavily dependent on external sources of financing, getting more long term finances subjecting assets for lease .short term borrowings are less than past as they mature earlier for repayment.

PROFIT &LOSS ACCOUNT INDEX ANALYSIS
RS(000) Revenue-net Cost of services Aircraft fuel Others Total Gross profit Distribution cost Admn expense Other provision &adjustment Exchange loss-net Other operating income Total Loss from operation1 Finance cost 2009 94563765 2008 88863258 2008 100% 2009 106.41

(31371753) (47257674) (78629427) 15934338 (5911946) (7180665) (689849)

(45854357) (39421454) (85275811) 3587447 (5309808) (5818218) (1807645)

100% 100% 100% 100% 100% 100% 100%

68.41 119.87 92.20 444.169 11.35 123.42 38.16

(6711336) 494462

(24118823) 1830920

100% 100%

27.82 27.00

(19999334) (4064996) (9243768)

(35223574) (31636127) (8351648)

100% 100% 100%

56.77 12.84 110.69

Loss before (13308764) (39987775) 100% 33.28 taxation Taxation 7486333 3849133 100% 194.49 Loss for the (5822431) (36138642) 100% 16.11 year Interpretation This analysis shows that fuel expense in 2009 reduced also gross profit increases in 2009.it is because of increase in revenue &decrease in expenses. Corporation is better off now than 2008 but still facing huge loss. These problems are
• •

Employees are not satisfied about the Promotion procedure. PIA doesn’t have a good marketing strategy for certain international routes where PIA is facing financial losses. PIA is operating with Old aged fleet which is causing financial burden on PIA because of their highest operating cost .

• PIA have highest employee ratio to per airplane. Which is a huge financial burden on PIA. Suggestions 1. PIA should adopt transparent policy that employees should be promoted on merit basis. And Chairman of PIA should be appointed from with in the organization. Union should support it, it will motivate the employees and PIA will grow in profit. 2. PIA should adopt good marketing policies so that it will bring higher profit and maximum utilization of its available

resources, Business sector should be attracted to operate at full potential. 3. PIA should upgrade its fleet as it’s causing the airline higher operating cost and PIA is incurring loss .PIA should purchase new Airplane with twin engines these will reduce the operating cost of PIA. 4. Airline should focus on the customer’s satisfaction, refund process should be quick so that customer remains loyal to brand. 5. 6. 7. PIA should not induct new employees till the time they are needed . PIA should give bonus to the industrious and competent employees. There should be control on the increase of fares, as mediocre are in majority in Pakistan, and it is highly difficult for to even think about the air traveling. Management should think over it and at least they can start a new packaged flight twice a week having 50% fares. 8. Unnecessary losses. 10. 11. There should be clear and even distribution of work and only qualified person should be appointed on jobs. There should be improved service standards and that should focus on quality. facilities provided to the Government Department should be discouraged as it causes financial

Conclusion
In conclusion we can say that the losses to pia are mainly because of bad governance, another mian reason is the air ports which were developed on political basis. Employs are not motivated and even customers are not satisfied. PIA can achieve its lost glory if some serious efforts from management are done.

BIBLOIOGRAPHY 1. www.piac.com.pk 2. http://en.wikipedia.org/wiki/Pakistan_International_Airlines_destin ations 3. http://en.wikipedia.org/wiki/Pakistan_International_Airlines
4. Annual report of PIAC 2008 2009.

5. www.google.com
6. HR, Finance, Sales promotion Departments Multan office.

7. special thanks to Mr. javed akhtar sheikh head finance department Mr. Irfan manager sales promotion Mr kaleem sidiqui senior manager HR department Ch abdul hamid accounts officer

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