Pakistan International Airlines is the largest airline in Pakistan and it is one of oldest airlines in the world.Recently, the federal government has announced in a meeting that it has decided to restructure the core departments and functions of the PIA.The main objective of the government is to make Pakistan international airlines attractive for the international and national investors.According to the market experts,it is a good news for the investors but it would be very difficult to materialize this plan .Since, the government has only five months or so to manage Rs 150 billion loans and non-core assets of the company. It seems that federal government has taken too much time to make a decision about the fate of the PIA.
Pakistan International Airlines is the largest airline in Pakistan.The 85 % of the shares are owned by the government of Pakistan. The sales have shown a negative growth and that speaks of the precarious financial condition of the company.The sales of the company have decreased from Rs 112,130.066 million in 2012 to Rs 88,997.379 million in 2017.Net income of the company has decreased from Rs -33,181.540 million in 2012 to Rs -45,381.036 million.Pakistan International Airlines showed a negative net profit margin % of -51 % in the year 2016.
Following are the most important financial indicators of the company
EPS (2016) = Rs. – 9.71
Book Value (2016) = Rs. -59.41
Dividend (2016) = NA
Beta = 1.44
Current liabilities of the company are more than the current assets of the company.The current ratio of the company was 0.13 in the year 2016. This shows that company has a very weak financial strength.PIA has a high level of debt as compared to negative equity. PIA has earned positive cash flows of the Rs 1687.32 million in the year 2016 as compared to the Rs 577.37 million in the year 2015.
PIA needs complete overhauling and restructuring of all its operations.Market experts believe that in spite of encouraging plans of the government, it is still very difficult to predict the long-term future of the Pakistan International Airlines. However, short-run investors can earn some bucks from short-term price fluctuations of its shares in the market. But, long-term investors must adopt a cautious approach before investing in the PIA stock.
In the concluding remarks, it can be said that financial condition of the PIA is very weak.Therefore, the federal government must devise some long-term strategy for a complete overhaul of the company structure.