Pakistan’s national flag carrier, Pakistan International Airline (PIA), has released its annual financial reports for 2021.
Due to the COVID pandemic and flights restrictions in many countries, 2021 was a challenging year for PIA. The report states that the fourth quarter was profitable for the company after accumulating losses for the first three quarters.
As per the official report issued by the company, the airline’s major revenue streams remained affected during most of the year as Hajj and Umrah operations were halted and flights to Saudi Arabia, UAE, Gulf region, China, and Malaysia routes were suspended due to COVID related travel restrictions. The company also faced a ban from European Aviation Safety Agency (EASA), which barred PIA to operate its flights to Europe and the UK amid pilot’s licenses controversy.
The company stated that it mainly relied on the domestic markets which resulted in a loss of significant revenues compared with the same period of previous years. The report stated that the company remained heavily reliant on KSA and UK routes, which contributed around 65 percent of the total revenue chunk of PIA.
In 2021, the company ventured into chartered flights operations, which remained profitable amid the Afghanistan crises in August and September 2021. PIA also launched new routes toward the Central Asian states and the middle east in an attempt to make up for the lost revenue. PIA also made marked expansion on domestic routes along with a long-term and sustainable strategy to promote domestic tourism within Pakistan and created a new religious pilgrimage trail to Iraq and Syria. These flights included Skardu, Saidu Sharif, Baku, and Najaf.
The company says that despite the challenges, PIA’s overall revenues only took a dip of 10 percent, from Rs. 94 billion in 2020 to Rs. 86 billion in 2021. The resultant operational losses were also Rs. 15 billion in 2021, mainly because of the reduced revenues. Despite the route restraints, the PIA team did not sit back and continued its efforts to generate revenues from exploring various markets.
Interestingly, PIA showed a remarkable comeback in the fourth quarter when travel restrictions on KSA, UAE, and Gulf were comparatively relaxed. PIA, in the first three quarters, achieved revenue of Rs. 49 billion, whereas the last quarter alone saw revenues of Rs. 37 billion, consequent to the resumption of traffic on these routes. PIA has also posted operational profitability of Rs. 2.125 billion in the fourth quarter (Q4), which clearly shows the early signs of recovery from COVID.
During the COVID pandemic, the aviation industry was the worst-hit industry globally, and the International Air Transport Association (IATA) predicts recovery from the 2019 levels by the end of 2023. Many airlines across the world took massive bailouts from their respective governments to remain operational, whereas PIA remained operational with no liquidity injection from the government.
The Annual report also portrays that in the year under review, PIA paid its all-current year liabilities to CAA and FBR. With cash flow constraints, the challenge is to clear legacy liabilities of the past, stated the press release. It is also pertinent to mention that Prime Ministers Committee on Economic Reforms and Restructuring has already recommended that the government must dispose of PIA’s past liabilities to enable PIA to recover and become profitable.