AMRAIZ KHAN
LAHORE PIA management despite complete ban on all international flights coming into Canada, UK, Europe etc announced four special flights quoting humanitarian grounds, without necessary home work in terms of COVIT-19 Test Reports confirming that none of the passengers have been infected and on arrival they would be liable to face 14-day mandatory quarantine restrictions. Just 24 hours before departure of first special flight from Lahore to Toronto, PIA has announced cancellation. Aviation analysts and tour operators were surprised at lack of planning which should have preceded announcement and sale of tickets. Airline Chief faces a gigantic task if he intends to pursue the role played by Rafiq Saigol and Nur Khan. The Board of Directors (BOD) needs to be revamped instead of becoming a jirga-like Council of Elders, who were part of problem when they were at helm and cannot be expected to be part of solution. He needs to follow Nur Khan who chose to select a team of young qualified and dynamic professionals well versed in dynamics of commercial aviation where passenger needs and their demands for safe flight offering best inflight entertainment, seats, food etc. are a must. PIA operating cost must be reduced starting with cancellation of all contractual employees who were rehired beyond age of superannuation. Air Marshal must proceed with unfinished task of terminating all fake degree holders in an airline which has surplus employees and operational requirements have reduced drastically. According to a report published on Bloomberg the COVIT19 virus is discriminate, affecting both budget airline operators, national flag carriers and major commercial aircrafts manufacturers like Boeing Co and Airbus SE facing cancellation of orders. Using Z-Score method developed in 1960 by Edward Altman to predict bankruptcies, Bloomberg News filtered listed commercial airlines to identify those “most at risk of going bust, based on available data” without taking into account government bailouts and funding to keep them operable. The Z- score is based on 5 variables measuring liquidity, solvency, profitability, leverage and recent performance. Altman Z-score has an accuracy rate of 80% and 90% in predicting bankruptcies within a year. Bloomberg quoting spokesman of PIA states that it accepts “losses and debt have become too much for the company to handle alone, and that options suggested to the government include a debt-to-equity swap and long-term bond issue”. PIA and its subsidiary PIA Investment have been going in losses surviving on loans obtained from commercial banks on sovereign guarantee. Transparency International has recently questioned transparency issues in long-term lease of PIA Hotel Roosevelt which is 100% owned by PIA and why its financial reports have not been subjected to audit scrutiny by Auditor General Pakistan. Unfortunately, PIA tops list of those most at risk of going bankrupt with Altman’s Z Score of – 6.83, followed by Air Asia Indonesia with -1.41, Nok Air -0.64. According to internationally reputed Aviation sources any airline below Altman’s Z-Score of +1.8 is in danger of bankruptcy within two years, if it does not get external cash injection and funding. Low cost carrier Norwegian Air Shuttle ASA, AIR France, KLM, American Airlines, Sky West Inc etc are also below the threshold of 1.8. UK based Flybe Group Plc collapsed recently. Airlines with a score above Z-3.0 are considered having good financial footing
