Pakistan International Airlines has finally announced its financial results for the first quarter of 2020, ending on March 31.
The national flag carrier of Pakistan has incurred a staggering net loss of Rs. 19.26 billion, increasing by almost 54.08% compared with a loss of Rs. 12.50 billion in the same quarter last year, according to a filing at the PSX.
A.A.H Soomro, managing director at Khadim Ali Shah Bukhari Securities told ProPakistani,
The losses have increased because of $38 million worth of exchange losses due to currency volatility & mammoth $60 million worth of financing costs. With virtually no revenue in 2Q, I expect losses to magnify despite lowering financial costs & exchange losses.
Soomro further said that the airline industry as a whole is under severe duress globally owing to low international travel amid the pandemic. The loss will get worse & requires aggressive restructuring, government support & rightsizing, he added.
However, PIA’s revenue surged to Rs. 38.97 billion for the period under review, up by 16.61% as compared to Rs. 33.42 billion in 2019. The rise in the cost of services was increased by 11% to Rs. 37.50 billion. Due to the increase in sales, PIA managed to put up a gross profit of Rs. 1.47 billion as compared to a gross loss of Rs. 251 million in the same period last year.
Administrative expenses increased to Rs. 3.31 billion from Rs. 2.57 billion. Other income saw an increase of 5.2x to Rs. 527.52 million as compared to Rs. 86.20 million in the same period last year.
However, PIA’s loss from operations during Q1 2020 decreased by 33.61% to Rs. 3.24 billion as compared to Rs. 4.88 billion in Q1 2019.
The company reported a massive increase of 24X in exchange losses during Q1 2020. It was reported at Rs. 6.12 billion as compared to just 244.17 million in 2019 due to the volatility in Rupee-Dollar parity. The finance costs of the company soared to Rs. 9.88 billion, increasing by 37% as compared with Rs. 7.21 billion recorded last year.
Suban Iqbal, a financial analyst, while commenting on the results said,
Rather than giving bailout to PIA or sovereign guarantees, the only solution of PIA is to declare bankruptcy and follow the legal and corporate practices. The government-owned entities cannot compete with private ones on price and quality in a highly competitive market. PIA is running into a loss of around Rs. 6 billion on a monthly basis. Even over-staffing is not the reason for PIA’s continued losses as these are only 1/3 of the total loss.
The company reported a loss per share of Rs. 3.68 as compared to a loss per share of Rs. 2.39 for the A-class ordinary shares of Rs. 10. each. For the B class ordinary shares of Rs. 5 each, the company reported a loss per share of Rs. 1.84 versus Rs. 1.20 reported in Q1 2020.
PIA’s share at the bourse was closed at Rs. 4.41, up by Rs. 0.03 or 0.68%, with a turnover of 743,500 shares on Wednesday.
