Pakistan International Airline (PIA) and its subsidiary, PIA Investments Limited, continue to bleed massively due to a variety of reasons, ranging from mismanagement to lack of transparency and weak audit controls by independent auditors as well as the auditor general of pakistan, Profit reported.
According to reports, PIA’s before tax unaudited six-month loss for the period January-June 2019 stands at Rs32.746 billion, which, after taxation, is expected to be in the range of Rs38-39 billion. Although PIA revenue generation in this period has risen by 44pc in terms of Pak Rupee, it does not reflect the actual revenue since almost 55-60pc of its revenue is earned in hard foreign currency through sales at its various international outlets and travel agents.
Rupee devaluation as compared to 2018 is in the range of approximately 39-40pc, while the cost of fuel has increased by over 19pc. PIA route miles decreased as compared to 2018.
According to the annual report of PIA for 2018, the national flag carrier registered a total loss of Rs. 59.685 billion. It was the highest ever loss for PIA since the years 2008-2011 when it was headed by Ijaz Haroon and Nadeem Yousafzai, the former MDs who were allegedly involved in financial embezzlements causing losses of billions to the national exchequer.
Mismanagement, lack of transparency, and weak audit controls remain the underlying reasons that impede PIA in becoming a profitable organization.
Since 2015, PIA Investments Limited, a subsidiary of PIA, has also registered losses while the senior management continues to enjoy all kinds of perks and bonuses. Dr. Najeeb Samie, the current MD of PIA Investments Limited, was set to retire in 2015. However, because of his connections, Dr. Najeeb managed to receive extensions in his retirement. Dr. Najeeb is a member of the board of directors of HBL and also serves as a director in several tourism entities in France and the USA.
Perhaps that is why the meetings of the board of directors of PIA Investments Limited have always been held in either New York or Paris and never in Pakistan. Not only is this a violation of rules of PIA Investments Limited but it also prevents the Auditor General of Pakistan to be a part of these meetings. In the meeting of the board of directors, a summary of the accounts in the past 6 months, pricing mechanisms, and quantification of the expenditures of the organization were discussed.
Moreover, since the days of Ijaz Haroon, unqualified individuals have been appointed as Chief Internal Auditors. The primary requirement for an individual to be installed at this post is that they must be a qualified Chartered Accountant. So far, MBA graduates and audit diploma holders have been chosen to conduct internal audits of the PIA.
The board of audit hasn’t met in 2019. Audit experts have expressed serious concerns that no meeting of the Audit Board of PIA has been held yet.
The only positive point in the report is that PIA’s revenue increased by 44% during the first six months of 2019 compared to the same period in 2018. However, nearly 60% of this revenue was earned in foreign currency through international sales. The revenue from January to June was hit by a 40% rupee devaluation and a 19% increase in the cost of fuel in comparison to H1 2018.