Ever since Air Marshal Arshad Malik has taken over PIA as its CEO there are weekly different news reports appearing in certain sections of media about PIA operational profitability. Everything PIA is asked for proof or any document the reply is silence. On top of that its PIA and Aviation minister both who are trying to spin the news about the airline’s financial health. Whereas the airline has not submitted mandatory financial data from the past 6 quarters.
Pakistan major English newspaper Dawn in its editorial adviced the airline’s boss “to refrain from boasting about the revenues or ‘operating profit’ that the national carrier is running these days until the company has filed its annual and quarterly results as it is required to do under the law”. It is important to note that PIA is a listed company and its shares are publicly traded. On one hand there are these tall claims about profitability and on the other hand, the airline says that “the company’s accounts people are still learning the ropes of the new software that is supposed to handle company finances”.
This is shocking to read because if the airline “accounts people are still learning the ropes of the new software” how can they even come up with anything? Let alone such tall claims of break-even or operational profitability? Clearly someone is trying to spin the hell out of something that is non-existent. Remember in the financial world seeing is believing. Things are not done verbally but on paper.
Dawn in its editorial highlights the fact that “it makes for a sorry sight to see the head of a listed company paint the financial health of his company in glowing colours when he has not been able to report financial results for almost two years”. The company had to be placed on the defaulters’ segment by the stock exchange as, by law, these results are supposed to be filed within 120 days of the end of the year. Clearly, PIA is deep in default with regard to this elementary obligation of all listed companies. to make the matter worse the logic for this delay is unconvincing.
And Dawn editorial has good advice for the CEO that “shouting the ‘good news’ from the rooftops does not impress corporate circles. Before coming up with any numbers for revenue or profits in public gatherings, PIA should focus on delivering on its responsibility to its shareholders and furnish a complete and audited picture of the company’s balance sheet and cash-flow statements down to the latest quarter”.
And the results that PIA is seeing now came from the drastic cost-cutting by his predecessor who stopped operating almost all the routes that we in loss. On top of that, he decided to stop the practice of keeping own fleet standing and taking the advice of the CTO to wet-lease at least 4 aircraft every six months. And the talk of operational profitability in the face of a dramatic rise of dollar against rupee looks very strange. And we have to yet to see the results of all these new routes that PIA has launched. Because launching a new route puts immense strain on the airline’s financials.
And if the airline is still managing to pull off profit against these odds then one can easily say that the savour has landed who will turn this sinking ship around. But we are not holding our breath yet.