You are on page 1of 51

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 Calcutta-


Akyab-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 state-
owned 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 addition to transport
activities, Orient Airways had
established the nucleus of overhaul
and maintenance facilities and
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-Karachi-
Dacca, route which later proved to be very successful. This trail-
blazing 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 cross-
Atlantic 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 air-
hostesses' 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, 777-
200LR 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 12
No. of Aircraft 7
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 co-
ordination 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.
b) 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.
c) Interview:
Those qualifying the written test are called for an interview
administered by the selection board assisted by the administration
department.
d) 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.
e) 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.
f) Offer of Appointment:
After the approval, the Administration Department notifies the
decision to the candidates through a “letter of appointment”.
g) 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 under-
officer class, the period is 3-6 months.
h) Confirmation:
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 2008
Current Ratio = 16880.56/68817.62
15039.28/72528.40
= 0.25 0.21

Current Ratio

1.2
1
0.8
Ratio

0.6
0.4
0.2
0
2009 2008 2007 2006 2005 2004
Years
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
0
Loss (Rs)

-5 2009 2008 2007 2006 2005 2004


-10
-15
-20
Years
Net Asset per Share

Net Asset per Share

50
40
30
Rs

20
10
0
2009 2008 2007 2006 2005 2004
Years

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.
Revenue per employee =operating revenue /average no of employee

2009 2008

94563.77 / 17944 x1000000 88863.26/18036


x1000000

5269938 4926994

Revenue per Employee

6000000
4000000
Rs

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 2008

94563765/160013178 88863258/139669867

0.59 0.64

Asset Turn Over Ratio

0.65
0.6
ratio

0.55
0.5
2009 2008
years

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 2008

742945/68817616 789555/72528401

0.107 0.0108

cash ratio

0.01085
0.0108
ratio

0.01075
0.0107
0.01065
2009 2008
year

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 2008

94563.77/133647.52 88863.26/115123.49

0.71 0.77

fixed asset turn over ratio

0.78
0.76
ratio

0.74
0.72
0.7
0.68
2009 2008
year

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
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 5757849/139669867

0.498 0.0412

debt to asset ratio

0.06
0.04
ratio

0.02
0
2009 2008
year

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 2009 2008 variance


Pkr(million) Pkr(million) %
Passenger 84510 79479 6.3
Freight 4982 5459 (8.7)
Others 5072 3925 29.2
Total 94564 88863 6.4

Passenger 2009 2008 % change


Ask,s(million) 19,859 19528 1.70
Rpk,s(million) 13,891 13925 -0.24
Seat factor (%) 70.00 71.00 …
Passenger revenue(pkr million) 84,510 79479 6.33
Yield factor 6.1 5.7 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 2009 2008 %(change)


Aftk,s(million) 545 547 -0.44
Rftk,s(million) 270 320 -15.48
Freight 4982 5459 -8.74
revenue(million)
Yield factor 18.4 17.1 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) Common size%


Dec2009 Dec2008 Dec2007 %200 %200 %200
9 8 7
Assets
Non current assets
Fixed assets

Property 1335555 1150103 9549715 83.46 82.34 80.40


plant 60 37 1
&equipmen
t
Intangibles 91962 113154 103475 0.057 0.081 0.087
Total 1336475 1151234 9560062 83.52
22 91 6
Long term 4446950 4497642 4540229 2.778 3.22 3.82
investments
Long term -- --- 1283000 -- -- 1.08
advances
Long term 5038148 5009452 4098388 3.14 3.58 0.034
deposits 5
&pre
payments
Total 1431326 1246305 1055222 89.45 89.23 88.84
20 85 43
Current assets
Stores 3987423 3726940 3251940 2.49 2.66 2.737
&spare
parts
Trade debts 7978187 5757849 5012778 4.98 4.12 4.22
Advances 2189162 1418610 604470 1.36 1.015 0.508
Trade 1158497 1591583 1023312 0.724 1.139 0.861
deposits
&prepayme
nt
Accrued -- 1325 32789 -- 0.01 0.027
interests
Other 799193 1441564 1043971 0.499 1.032 0.878
receivables
Short term 25151 42505 32093 0.015 0.030 0.027
investment
Taxation- -- 269351 274519 -- 0.192 0.231
net 8
Cash 742945 789555 1975459 0.46 1.565 1.663
&bank
balances
Total 1688055 1503928 1325133 10.54 10.76 11.15
8 2 1
Total assets 1600131 1396698 1187735 100% 100% 100%
78 67 74

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) Common size%


Dec2009 Dec2008 Dec2007 %200 %200 %200
9 8 7
Equity & liabilities
Share capital &reserves

Share 2328035 2142301 2087807 14.54 15.34 17.58


capital 6 4 4
Reserves 7233510 6894543 3334364 45.20 49.36 28.07
1 7 3
Total 4905474 4752242 1246556 30.65 34.02 10.49
equity 5 3 9
Surplus on 2828190 1419270 972040 17.67 10.16 0.81
revaluation 3 0
of fixed
assets
Non current liabilities
Long term 2455311 1947141 1703707 15.35 13.94 14.34
financing 3 6 5
Term 1959232 1243014 1072373 12.25 8.89 9.028
finance 0 3 8
&sukuk
certificate
Liabilities 6127279 6502466 4652402 38.29 46.55 39.17
against 7 0 4
assets
subject to
finance
lease
Long term 365847 301770 321547 0.228 0.216 0.270
deposits 7
Deferred 6184327 3243205 3049166 3.86 2.32 2.56
liabilities
total 1196840 1004711 7765555 69.97 71.94 65.38
4 89 0
Current liabilities
Trade 2868451 2794749 2061717 17.92 20.00 17.36
&other 4 6 4 9
payables
including
provisions
Accrued 1845592 1475456 978317 1.154 1.05 0.82
interest/ma
rk up/profit
Provision 848890 --- -- 0.53 ---
for taxation
Shot term 2398216 3050006 1810588 14.98 21.83 15.24
borrowings 0 2 4
Current 5328458 5352528 5662451 3.34 3.83 4.77
maturities
of long
term
financing
Term 5120 --- 2523232 --- 2.12
finance
&sukuk
certificate
Liabilities 8122182 7252859 4724495 5.07 5.20 3.98
against
assets
subject to
finance
lease
total 6881761 7252840 5261155 43.00 51.92 44.29
6 1 3 7
Contingencies &commitments
Total 1600131 1396698 1187735 100% 100% 100%
equity 78 67 74
&liabilities

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) 2009 2008 2009 2008


Revenue-net 94563765 88863258 100% 100%
Cost of
services
Aircraft fuel (31371753) (45854357) 33.17 51.60
Others (47257674) (39421454) 49.97 44.36
Total (78629427) (85275811) 83.15 95.96
Gross profit 15934338 3587447 16.85 4.04
Distribution (5911946) (5309808) 6.25 5.98
cost
Admn (7180665 (5818218) 7.59 6.54
expense
Other (689849) (1807645) 0.7295 2.03
provision
&adjustment
Exchange (6711336) (24118823) 7.097 27.14
loss-net
Other 494462 (1830920) 0.522 2.06
operating
income
Total (19999334) (35223574) 21.15 39.63
Loss from (4064996) (31636127) 4.29 35.60
operation1
Finance cost (9243768) (8351648) 9.77 9.39
Loss before (13308764) (39987775) 14.07 45
taxation
Taxation 7486333 3849133 7.91 4.33
Loss for the (5822431) (36138642) 6.15 40.7
year

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 Dec2008 Dec2007 2009 2008 2007


Assets
Non current assets
Fixed assets

Property 1335555 1150103 9549715 139.85 120.43 100


plant 60 37 1 %
&equipmen
t
Intangibles 91962 113154 103475 88.87 109.35 100
%
Total 1336475 1151234 9560062 139.79 120.42 100
22 91 6 %
Long term 4446950 4497642 4540229 97.94 99.06 100
investments %
Long term -- --- 1283000 ---
advances
Long term 5038148 5009452 4098388 122.92 122.22 100
deposits %
&pre
payments
Total 1431326 1246305 1055222 135.64 118.10 100
20 85 43 2 8 %
Current assets
Stores 3987423 3726940 3251940 122.61 114.60 100
&spare %
parts
Trade debts 7978187 5757849 5012778 159.16 114.86 100
%
Advances 2189162 1418610 604470 362.16 234.68 100
6 %
Trade 1158497 1591583 1023312 113.21 155.53 100
deposits %
&prepayme
nt
Accrued -- 1325 32789 -- 4.04 100
interests %
Other 799193 1441564 1043971 76.55 138.08 100
receivables %
Short term 25151 42505 32093 78.36 132.44 100
investment %
Taxation- -- 269351 274519 -- 98.117 100
net %
Cash 742945 789555 1975459 37.60 39.96 100
&bank %
balances
Total 1688055 1503928 1325133 127.38 113.49 100
8 2 1 7 %
Total assets 1600131 1396698 1187735 134.72 117.59 100
78 67 74 %
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 Dec2007 2009 2008 2007


Equity & liabilities
Share capital &reserves

Share 2328035 2142301 2087807 111.50 102.61 100


capital 6 4 4 6 %
Reserves 7233510 6894543 3334364 216.93 206.78 100
1 7 3 %
Total 4905474 4752242 1246556 393.52 381.23 100
equity 5 3 9 %
Surplus on 2828190 1419270 972040 2909.5 1460.1 100
revaluation 3 0 4 0 %
of fixed
assets
Non current liabilities
Long term 2455311 1947141 1703707 144.11 114.29 100
financing 3 6 5 %
Term 1959232 1243014 1072373 182.70 115.91 100
finance & 0 3 8 %
sukuk
certificate
Liabilities 6127279 6502466 4652402 131.71 139.77 100
against 7 0 4 %
assets
subject to
finance
lease
Long term 365847 301770 321547 113.78 93.84 100
deposits %
Deferred 6184327 3243205 3049166 202.82 106.36 100
liabilities %
total 1196840 1004711 7765555 144.19 129.38 100
4 89 0 %
Current liabilities
Trade 2868451 2794749 2061717 139.13 135.55 100
&other 4 6 4 %
payables
including
provisions
Accrued 1845592 1475456 978317 188.65 150.81 100
interest/ma %
rk up/profit
Provision 848890 --- -- -- ---
for taxation
Shot term 2398216 3050006 1810588 132.46 168.45 100
borrowings 0 2 4 %
Current 5328458 5352528 5662451 94.10 94.52 100
maturities %
of long
term
financing
Term 5120 --- 2523232 0.20 ---
finance
&sukuk
certificate
Liabilities 8122182 7252859 4724495 171.93 153.52 100
against %
assets
subject to
finance
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) 2009 2008 2008 2009
Revenue-net 94563765 88863258 100% 106.41
Cost of
services
Aircraft fuel (31371753) (45854357) 100% 68.41
Others (47257674) (39421454) 100% 119.87
Total (78629427) (85275811) 100% 92.20
Gross profit 15934338 3587447 100% 444.169
Distribution (5911946) (5309808) 100% 11.35
cost
Admn (7180665) (5818218) 100% 123.42
expense
Other (689849) (1807645) 100% 38.16
provision
&adjustment
Exchange (6711336) (24118823) 100% 27.82
loss-net
Other 494462 1830920 100% 27.00
operating
income
Total (19999334) (35223574) 100% 56.77
Loss from (4064996) (31636127) 100% 12.84
operation1
Finance cost (9243768) (8351648) 100% 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. PIA should not induct new employees till the time they are
needed .
6. PIA should give bonus to the industrious and competent
employees.
7. 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 facilities provided to the Government
Department should be discouraged as it causes financial
losses.
10. There should be clear and even distribution of work and only
qualified person should be appointed on jobs.
11. There should be improved service standards and that should
focus on quality.
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