Pakistan International Airlines Corporation

Pakistan International Airlines Corporation (Urdu: پاکستان بین الاقوامی ایئر لائنز), commonly known as PIA, is the flag carrier airline of Pakistan.The airline, with its head office on the grounds of Jinnah International Airport in Karachi, operates scheduled services to 24 domestic destinations and 39 international destinations in 25 countries across Asia, Europe and North America.Its main bases are at Karachi, Lahore and Islamabad/Rawalpindi. PIA has been ranked as a 3-star airline by Skytrax, the world's official airline and airport reviewer.
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 and the Far East. The airline is owned by the Government of Pakistan (87%) and other shareholders (13%). It employed 18,043 people as of May 2008.

Corporate management

Structure

Pakistan International Airlines Corporation (PIAC) is majority owned by the Government of Pakistan (87%) while the remainder (13%) by private shareholders. The airline falls under the direction of the Ministry of Defence chaired by its current chairman, Ahmad Mukhtar. The airline is managed by managing director, as well as the Board of Directors. The Board consists of nine independent non-executive members and has four sub-committees, being an Audit Committee, Brand and Advertising Committee, Finance Committee and Human Resource Committee each with its own charter and chairman. The MD leads the executive management of staff who control the running of the airline. The airline's main headquarters are located in Karachi whilst smaller sub head offices are located in several cities within Pakistan.

Privatisation

PIA offices in Lahore

In the late 1990s, the Government of Pakistan considered selling the airline to the private sector due to the persistent losses suffered by the airline.The Government announced the privatisation plans but they were never implemented. Several steps towards outsourcing of non-core business have been initiated. Catering units (starting with Karachi Flight Kitchen), ground handling (starting with ramp services) and engineering, are to be gradually carved out of the airline and operated as independent companies. During 1997, Pakistan called in a team from International Finance (IFC), the consulting arm of the World Bank, to advise on restructuring and privatisation of Pakistan International Airlines (PIA) however no agreement was reached.The government has many times planned the privatization of the State owned. however as of yet no reasonable agreement or solution has been found. On 18 February 2009 the carrier was dropped from the privatisation list.

Financial performance

The following table gives the key financial results for the 2009 financial year along with those for the past five years. The airline reported a reduction of post tax losses of 83% in 2009 (compared to 2008) based on a reduction in fuel cost, comparatively stable exchange rate for the Pakistan Ruppee and higher revenues. The exchange losses due to declining Ruppee rate were reported to be PKR 6.71 billion in 2009 compared to a whopping PKR 24.12 billion in 2008.
The airline also faces other challenges to its profitability such as staffing levels and overall management challenges. An employee count of 17,944 for a fleet of 40 aircraft is clearly an area that needs to be reviewed.

Revenues

Year	Revenues (Rs. Million)	Profit/(Loss) (Rs. Million)	Employees (Ave.)
2009	94,564	(5,822)	17,944
2008	88,863	(36,139)	18,036
2007	70,481	(13,399)	18,149
2006	70,587	(12,763)	18,282
2005	64,074	(4,412)	19,263
2004	57,788	2,307	19,634

The current year interim results (half yearly report for 2010) do not show any improvement in profitability. The after tax losses reported for the first six months of 2010 are PKR 6.90 billion as compared to PKR 5.39 billion for the first six months of 2009. Revenue, however, did increase to PKR 49.31 billion for the first half of 2010 compared with PKR 41.92 billion for the first half of 2009.
Passenger traffic has been more or less static over the last five years hovering around the five and a half million mark with a load factor of around 70%.

Passenger Traffic

Year	Revenue Passengers (Million)	Passenger Load Factor	Average Passenger Stage Distance (Statute KM)
2009	5.535	70%	2,510
2008	5.617	71%	2,479
2007	5.415	67%	2,527
2006	5.732	69%	2,639
2005	5.499	70%	2,638
2004	5.120	66%	2,641

It is interesting to look at the annual revenue breakdown for 2009: 89.4% is from passenger traffic with just 5.3% from cargo. The remaining 5.3% is from excess baggage charges, charter, engineering and other services.

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