Five year plan proposed to bring PIA to profitability by 2024

PIA plan

An international consultant demonstrated the government with a five-year business plan for the recovery of Pakistan International Airlines (PIA), which advocated adding 20 aircraft to the fleet and overhauling the airline’s administrative and financial systems in order to turn it around by 2026.

Finance Minister Shaukat Tarin received a summary of the business plan from IATA Consulting. Despite injecting hundreds of billions of rupees, it was discovered that PIA would continue to lose money towards the end of the Pakistan Tehreek-e-Insaf (PTI) government’s tenure. The consultant recommended that PIA’s fleet be increased from 29 to 49 aircraft, as the loss-making national flag carrier continues to devour billions of rupees in taxpayer funds without showing any signs of progress.

Read more: PIA to cut aircraft-to-employee ratio from 550 to 260 to save Rs 8 billion

Four wide-body planes and 16 narrow-body planes have been recommended by the consultant. The government was advised that by implementing all of the restructuring steps, breakeven would be attained in the fourth year, indicating that the airline would continue to lose money. PIA management, however, despite agreeing to several of the recommendations, felt the plan was “aggressive and tough to accept,” according to reports.

Prime Minister Imran Khan claimed three years ago when Arshad Malik was appointed as the chief executive officer of PIA that he would turn around the loss-making airline.

However, according to the consultant’s projection, PIA would lose $120 million in 2022 due to operating costs alone, which would rise to $156 million in 2023. Total revenues are expected to be $934 million in 2023, the final year of PTI’s five-year term, with an operating cost of $1.1 billion.

In 2023, the plan calls for a 23 percent increase in operating revenue versus an 11 percent increase in operating costs. Similarly, the operational loss in 2024 is expected to be $62 million, which will be converted into a $42 million operational profit before turning into a marginal operational loss of $5 million in 2026, the final year of the business plan.

After accounting for the five-year plan’s improvement initiatives, the consultant predicted that operating margins would rise by 0.4 percent in 2025 and 3.4 percent in the five-year plan’s final year. “The introduction and implementation of the planned improvement measures is largely contingent on the accomplishment of the predicted results and overall success of this business plan,” IATA Consulting informed the finance minister.

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