| PAKISTAN INTERNATIONAL AIRLINES |
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| ANNUAL
REPORT 1994/95 |
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| CONTENTS |
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| Notice
of 39th Annual General Meeting |
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2 |
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| Board
of Directors and Management |
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3 |
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| Directors'
Report |
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4 |
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| Highlights |
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5 |
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| Chairman's
Brief |
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6 |
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| Performance
Review |
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7 |
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| Auditors'
Report to the Members |
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9 |
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| Balance
Sheet |
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10 |
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| Profit
& Loss Account |
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11 |
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| Statement
of Changes in Financial Position |
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12 |
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| Notes
to the Accounts |
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13 |
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| Statement
Under Section 237 of the Companies Ordinance, 1984 |
29 |
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| Decade
in Statistics |
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30 |
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| Pattern
of Shareholding |
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32 |
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| NOTICE
OF 39TH ANNUAL GENERAL MEETING |
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NOTICE IS HEREBY GIVEN
that the 39th Annual General Meeting of the Shareholders of Pakistan
International |
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| Airlines
Corporation will be held at 1500 Hours on Saturday, 9th December, 1995,
behind Airport Hotel, Quaid-e-Azam |
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| International
Airport Karachi, to transact the following business: |
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| 1.
To confirm the minutes of the 38th Annual General Meeting held on 22nd
December, 1994. |
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| 2.
To receive and adopt the Audited Accounts for the year ended 30th June, 1995,
together with the |
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| Auditors'
and Directors' reports. |
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| 3.To
consider and pass with or without modification the following resolution as a
resolution under Section |
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| 208
of the Companies Ordinance, 1984: |
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| "RESOLVED
that an advance of Rs. 142.06 million in US Dollars to an Associated Company
- PIA |
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| Investments
Limited is hereby approved." |
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| 4.To
transact any other business which may legally be transacted at any AGM. |
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By order of the Board |
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(GHAZANFAR MASHKOOR) |
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SECRETARY-PIAC |
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| Karachi:
17th November, 1995 |
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| Notes: |
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| a)The
Share Transfer Books of the Corporation will remain closed from 4th December,
1995, to 17th |
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| December,
1995, both days inclusive. Transfer documents received in order during the
office hours by |
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| Sunday,
3rd December, 1995, will be in time for registration of transfer of shares. |
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| b)A
Shareholder entitled to attend and vote at the General Meeting is entitled to
appoint another |
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| Shareholder
as proxy. Proxies and Powers of Attorney in order to be effective, must be
deposited at the |
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| Head
Office of the Corporation not less than 48 hours before the time fixed for
holding the Meeting unless |
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| the
Power of Attorney has already been registered in the Corporation books, and
must be duly stamped, |
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| signed
and witnessed. |
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| c)Shareholders
are requested to promptly notify the Corporation of any change in their
addresses. |
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| d)Entry
at the Meeting place will start at 1400 hours and close at 1500 hours.
Shareholders cooperation |
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| in
this regard will be appreciated. |
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| Board
of Directors |
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| As
on 26th October, 1995 |
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| Sardar
Noor llahi Leghari |
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| Chairman
- PIAC |
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| Air
Chief Marshal |
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| Mohammad
Abbas Khattak |
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| Altaf
Ali Bhayo |
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| Dinshaw
H. Anklesaria |
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| Javed
Hasan Aly |
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| Mohammad
Mobeen Jumani |
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| M.B.
Abbasi |
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| Muhammad
Younus Dalia |
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| AVM
{Retd) Farooq Umar |
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| Managing
Director |
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| Ghazanfar
Mashkoor |
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| Secretary
- PIAC |
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| Registered
Office |
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| PIA
Building |
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| Quaid-e-Azam
International Airport |
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| Karachi
- Pakistan |
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| Management |
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| As
on 26th October, 1995 |
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| Sardar
Noor llahi Leghari |
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| Chairman
- PIAC |
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| AVM
(Retd) Farooq Umar |
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| Managing
Director |
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| Arshad
Mahmud |
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| Deputy
Managing Director (Finance) |
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| Khurshid
Anwar |
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| Deputy
Managing Director (Marketing] |
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| Dr.
S. Mir Muhammad Shah |
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| Deputy
Managing Director (PM&C) |
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| M.
Jalaluddin |
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| Director
Finance & Director Corporate Planning |
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| M.
Sadiq Siddiqui |
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| Director |
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| S.U.
Zaman |
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| Oftg.
Director Engineering & Maintenance |
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| Badshah
Gul |
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| Director
Information System/lnspection |
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| Jawaid
Akhtar |
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| Director
Training & Development |
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| S.M.
Tarin |
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| Director
Marketing |
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| Kaleem
Malik |
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| Director
Airport Services |
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| AVM
(Retd) Sardar Khan |
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| Director
Precision Engineering |
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| Brig.
(Retd) Javed Hasan |
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| Director
Sports |
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| Shahid
Islam |
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| Director
Subsidiaries |
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| Capt.
S.S. Zaman |
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| Director
Flight Operations |
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| Ali
Abbas Brohi |
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| Director |
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| Anwarul
Hasan |
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| Director
International Affairs |
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| Syed
Ghulam Qadir Shah Jamote |
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| Director
Administration |
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| Ghulam
Shabbir Pechuho |
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| Director
Flight Services |
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| Imran
A. Khan |
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| Director
Stores & Purchases |
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| Capt.
Nadeem Yousufzai |
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| Director
General Services |
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| DIRECTORS'
REPORT |
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| The
Directors have pleasure in placing before you their report together with the
Audited Annual Accounts for the year |
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| ended
June 30. 1995. |
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| ACCOUNTS |
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Rupees in thousand) |
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| Profit
for the year before provision for bonus |
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416,013 |
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| Provision
for bonus to employees |
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(95000) |
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-------------------- |
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| Profit
for the year |
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321,013 |
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| Effect
due to change in accounting estimates |
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113,862 |
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-------------------- |
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| Profit
before taxation |
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434,875 |
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| Provision
for taxation |
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(141410) |
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-------------------- |
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| Profit
after taxation |
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293,465 |
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| Profit
brought forward |
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325.599 |
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-------------------- |
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| Profit
available for appropriations |
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619,064 |
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| APPROPRIATION |
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| Dividend
on preference shares |
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16,500 |
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| Unappropriated
profit carried forward |
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602564 |
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========== |
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| CHAIRMAN'S
BRIEF |
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| The
Directors endorse the Chairman's Brief. |
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| DIRECTORS |
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| Since
the last Annual General Meeting held on December 22, 1994 some changes have
occurred in the Board of |
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| Directors
of the Corporation. Mr. Javed Hasan Aly, Mr. Mohammad Mobeen Jumani, Mr. M.B.
Abbasi & Mr. Muhammad Younus |
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| Dalia
joined as Board Members whereas Mr. Maqbool Ahmed Soomro and Mr. M. Aslam
Siddiqui relinquished charge as Board |
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| Members.
The Board welcomes the new Directors and wishes to place on record its
appreciation of the valuable services rendered |
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| by
the outgoing members. |
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| PATTERN
OF SHAREHOLDING |
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| The
pattern of shareholding is available at page No. 32 |
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For and on behalf of the
Board |
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|
SARDAR NOOR ILAHI LEGHARl |
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Chief Executive |
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| HIGHLIGHTS |
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1994-95 |
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1993-94 |
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| Operating
revenue |
(Rs. in million) |
25,417 |
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23,839 |
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| Operating
expenses |
(Rs. in million) |
24,198 |
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23,024 |
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| Operating
income |
(Rs. in million) |
1,219 |
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815 |
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| Net
worth |
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(Rs. in million) |
8,618 |
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8,341 |
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| Revenue
passenger kilometres |
(000) |
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10,382,398 |
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10,108,486 |
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| Passenger
load factor |
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65.50% |
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66.70% |
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| Revenue
tonne kilometres |
(000) |
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1,408,345 |
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1,365,011 |
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| Revenue
load factor |
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57.40% |
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58.20% |
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| Earning
per ordinary share |
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| Rs.
10 each |
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(Re.) |
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0.74 |
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0.36 |
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| Rs. |
5 each |
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(Re.) |
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0.37 |
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0.18 |
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| CHAIRMAN'S
BRIEF |
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| Dear
Shareholders, |
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| I
am pleased to present the Annual Report for 1994-95. I would like to take
this opportunity to review the financial |
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| performance
for the year and to apprise you on the future plans and prospects of your
airline. |
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| The
financial results are briefly set out below: |
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1994-95 |
1993-95 |
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|
(Rupees in million) |
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| Revenues |
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25,417 |
23,839 |
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| Costs
and expenditure |
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24,198 |
23,024 |
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| Operating
profit |
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|
1,219 |
815 |
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| Profit
before Taxation |
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|
434 |
258 |
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| Provision
for Taxation |
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|
141 |
118 |
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| Profit
after Taxation |
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|
293 |
140 |
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| As
per the audited accounts, the national airline has earned an operating profit
of Rs. 1,219 million as compared to a |
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| profit
of Rs. 815 million earned in the year ended 30 June 1994, thus showing an
increase of 50 percent. |
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| After
charging financial costs, providing for doubtful debts etc., profit for the
year amounted to Rs. 321 million compared |
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| to
Rs. 258 million of last year, an increase of 24.4 percent. Profit before
taxation is Rs. 434 million as compared to Rs. 258 |
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| million
last year. The revenue has increased by 6.6 percent and expenditure by 5.1
percent. |
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| The
cash position however remained under pressure due purchase of one used
A-300-B4 aircraft and B-747-200 simulator |
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| from
own resources besides debt service repayments peaking in 1994-95. |
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| The
airline recorded a seat factor of 66% in 199495 and has expanded its network
in Central Asian countries and |
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| Europe
and for the first time, operated Haj flights from all provincial capitals
besides Multan, Sukkur and the Federal capital. |
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| We
are now embarking on fleet modernization plan through the replacement by
ageing B-747-200. In this respect, the |
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| Government
had during the year waived off import duties levied on aircraft/spares,
allowed domestic fares to increase and set |
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| aside
an amount of Rs. 1,000 million in the National Budget for equity induction. |
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| The
Employees-Management relations remained cordial throughout the year and wage
negotiations were successfully |
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| concluded
with CBA and other Associations. |
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| I
would like to express my appreciation for the sincere efforts made by all in
this direction. I also wish to thank both the |
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| employees
as well as the Managing Director and his management team for their dedicated
skill, team work and well-timed actions |
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| to
meet the challenges in achieving profitability, despite adverse
circumstances. |
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| May
Allah bless us all in our efforts. |
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Yours sincerely, |
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|
(SARDAR NOOR ILAHI
LEGHARI) |
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|
CHAIRMAN |
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| PERFORMANCE
REVIEW |
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| The
airline was faced with yet another challenging year due to severe
inflationary conditions and changing aviation |
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| scenario.
The positive performance during the year reflects the resolve of the
management and employees to steer the |
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| airline
successfully through a difficult period. The airline is exploring all avenues
to further improve operating efficiency |
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| and
enhance the level of profitability in the future. |
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| The
activities of some key departments during the year are detailed below: |
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| MARKETING |
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| During
the year, Marketing Department was confronted with stiff competition both on
International and Domestic |
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| routes.
Despite the situation in Karachi and various marketing constraints like the
plague in India, introduction of new |
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| competitors
in the Gulf Market, the overall increase of revenue by 6.62% is commendable. |
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| In
order to off-set the impact of mounting competition the Department revamped
its marketing strategy and made the |
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| following
changes in PAK-NYC and PAK-UK flights: |
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| —
Daily B-747 flights with single stop enroute were provided on the PAK-NYC
route. More flights from up-country to |
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| NYC
have been provided and Frankfurt, Paris, Amsterdam are all connected with
Karachi, Lahore and Islamabad. |
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| —
8/weekly B-747 flights to UK out of which 4/weekly KHI-LON non-stop flights
have been made available with |
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| 2/weekly
LHE-LON connections. |
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| In
consonance with the Govt of Pakistan's policy of providing an airlink to
Myanmar, operations to Yangon have |
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| been
planned. Additionally, the following new routes have also been planned for
the not too distant future: |
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| 1.
Pasni-Sharjah v.v. with one weekly B-737. |
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| 2.
Islamabad-Bishkek-Almatay v.v. with one weekly B-737. |
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| 3.
Islamabad-Urumqi v.v. |
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| AIRPORT
SERVICES/FLIGHT SERVICES |
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| The
airline continued its concerted efforts to provide an improved level of
ground services. Haj flights were introduced |
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| for
the first time from Multan and Sukkur, thus offering 7 stations from where
Pakistanis are proceeding for Haj. This is a |
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| record
amongst the Muslim countries of the world. The movement of Hajis from these
areas was facilitated by complete |
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| Check-in,
Customs and Immigration control at their home station. Transit System DEPAKI
and documentation procedures |
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| were
developed to meet the Government requirement in Saudi Arabia and Pakistan.
The system has worked well. |
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| PIA
joined the Common User/Terminal Equipment (CUTE) System of Departure Control
at London Heathrow. The |
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| experience
will be beneficial for similar systems expected at other large airports in
the future. |
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| Quality
of in-flight service has so far been a key factor in the airline's success
and image. This is being further |
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| improved
to enhance PlA's profile. For this purpose, Attitude Development Refresher
Courses are held at PIA Training |
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| Centre
to reemphasise the finer points of service. A comprehensive programme is also
being launched to improve the |
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| quality
of meals, crockery, cutlery and inflight entertainment. |
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| ENGINEERING
AND MAINTENANCE |
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| Engineering
and Maintenance Department has kept a continuous vigil on Airworthiness of
PIA Fleet through the |
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| periodic
inspection of Aircraft and System; incorporation of evaluated modifications
on Aircraft and its Equipment. |
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| Departures
from design criteria were identified and corrective measures taken to meet
the Airworthiness requirements, thus |
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| ensuring
flight safety. Flight regularity was also ensured through timely and smooth
maintenance support. Engineering |
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| related
exports are being planned. |
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| CORPORATE
PLANNING DEPARTMENT |
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| During
the year, agreement for exercising purchase option on one used A-300-B4
aircraft from Air France was |
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| successfully
concluded and the lease was converted into outright purchase. Also, one used
B747-200 simulator has been |
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| acquired
and commissioned in December 1994 which has enabled PIA to train B747-200
crew at its own facility, |
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| thereby
saving a substantial amount of foreign exchange. Economic feasibility for the
acquisition of used simulator for |
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| A310-300,
B737-300 and F-27 aircraft is currently under study. |
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|
| INFORMATION
SYSTEM |
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| The
process of expansion of the Reservation System Network continued during the
year. An online system (FREPAK}, |
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| connecting
all the major airports and operational departments, has been installed to
enable effective monitoring and to |
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| improve
flight regularity. |
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| Automation
at airports has been extended to Sukkur, where computerised check-in system
is now installed, which will |
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| improve
operational efficiency and enhance convenience to the passengers. |
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| TRAINING |
|
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| The
PIA Training Centre at Karachi, during the year under review, conducted 938
training courses. A number of new |
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| courses
such as "Tourist Guide", "Leadership'', "Customer
Service", "Total Quality Management" and IIISO-9000" were |
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| introduced.
A new training facility for passenger service training was also set up. This
facility is in the shape of a mini |
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| airport
with check-in counters, waiting-lounges, weighing machines and other similar
equipment. |
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| The
training centre has also opened training facility to Non-PIA trainees, which
is a big step towards national skill |
|
| development
and a big step in preparing citizens for aviation-related jobs. The training
centre continues to receive |
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| trainees
from Syria, Nepal, Bangladesh and a number of African Airlines. |
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| SPORTS |
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| The
airline has been taking active interest in promoting sports as a national
service, and has over the years given |
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| solid
and substantial support to sportsmen. PIA players have been winning almost
all national events in squash, cricket, |
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| football
and hockey year after year, and its share in the formation of national teams
for competition in Olympic and other |
|
| international
events is substantial. In football, polo, chess and bridge too, PIA players
have made their mark in |
|
| international
contests. |
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| PlA's
Jansher Khan has won all the international ranking squash tournaments
throughout the world in 1994/1995 |
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| including
the prestigious World Open and British Open. |
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| AUDITORS'
REPORT TO THE MEMBERS |
|
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| We
have audited the annexed balance sheet of Pakistan International Airlines
Corporation as at June 30, 1995 |
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| and
the related profit and loss account and statement of changes in financial
position, together with the notes forming |
|
| part
thereof, for the year then ended and we state that we have obtained all the
information and explanations which to |
|
| the
best of our knowledge and belief were necessary for the purposes of our audit
and, after due verification thereof, we |
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| report
that: |
|
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| a)
in our opinion, proper books of account have been kept by the Corporation as
required by the Pakistan |
|
| International
Airlines Corporation Act, 1956 and rules made thereunder and the Companies
Ordinance, |
|
| 1984: |
|
|
| b)
in our opinion, the balance sheet and profit and loss account together with
the notes thereon have been |
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| drawn
up: |
|
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| (i)
in conformity with the Pakistan International Airlines Corporation Act, 1956; |
|
|
| (ii)
in conformity with the Companies Ordinance, 1984 and are in agreement with
the books of |
|
| account
and are further in accordance with accounting policies consistently applied; |
|
|
| {c)
in our opinion: |
|
|
| {i)
the expenditure incurred during the year was for the purpose of the
Corporation's business; and |
|
|
| (ii)
the business conducted, investment made and the expenditure incurred during
the year were in |
|
| accordance
with the objects of the Corporation; |
|
|
| {d)
in our opinion, and to the best of our information and according to the
explanations given to us, the |
|
| balance
sheet, profit and loss account and the statement of changes in financial
position, together with the |
|
| notes
forming part thereof, give the information required by the Companies
Ordinance, 1984 in the manner |
|
| so
required and respectively give a true and fair view of the state of the
Corporation's affairs as at |
|
| June
30, 1995 and of the profit and the changes in financial position for the year
then ended; and |
|
|
| (e)
in our opinion, no zokot was deductible at source under the Zakat and Ushr
Ordinance, 1980. |
|
|
| SIDAT
HYDER QAMAR MAQBOOL & CO. FORD, RHODES, ROBSON,
MORROW |
|
| Chartered
Accountants
Chartered Accountants |
|
|
| Karachi:
October 31, 1995 |
|
|
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 1995 |
|
|
|
1995 1994 |
|
1995 1994 |
|
|
|
Note |
(Rupees in thousand) |
(US$ in thousand) |
|
|
|
|
(note 31.4) |
|
| SHAREHOLDERS'
FUNDS |
|
|
|
|
|
| Shore
Capital |
|
3 |
3,884,618 |
3,545,107 |
124,957 |
115,526 |
|
| Reserves |
|
4 |
4,130,712 |
4,470,223 |
132,874 |
145,674 |
|
| Unappropriated
profit |
|
|
602,564 |
325,599 |
19,383 |
10,610 |
|
|
|
|
-------------------- |
-------------------- |
-------------------- |
----------------- |
|
|
|
8,617,894 |
8,340,929 |
277,214 |
271,810 |
|
| SURPLUS
ON REVALUATION OF FIXED ASSETS |
5 |
10,640 |
22,330 |
342 |
728 |
|
| REDEEMABLE
CAPITAL |
|
6 |
400,000 |
400,000 |
12,867 |
13,035 |
|
| LONG-TERM
LOANS |
|
7 |
865,573 |
1,474,200 |
27,843 |
48,041 |
|
| OBLIGATIONS
UNDER HIRE PURCHASE |
|
8 |
9,893,770 |
10,842,820 |
318,255 |
353,341 |
|
| LONG-TERM
DEPOSITS AND OTHER LIABILITIES |
9 |
1,639,355 |
1,225,327 |
52,733 |
39,930 |
|
|
|
|
| CURRENT
LIABILITIES |
|
|
|
|
|
|
| Current
maturity of long-term loans/ |
|
|
|
| obligations
under hire purchase |
|
7-8 |
1,546,566 |
1,705,236 |
49,749 |
55,570 |
|
| Short-term
loans |
|
10 |
1,235,846 |
1,283,172 |
39,754 |
41,815 |
|
| Creditors,
accrued expenses |
|
|
|
|
| and
other liabilities |
|
11 |
4,584,143 |
4,858,197 |
147,459 |
158,317 |
|
|
|
|
|
|
|
|
|
7,366,555 |
7,846,605 |
236,962 |
255,702 |
|
|
|
|
|
|
| CONTINGENT
LIABILITIES AND COMMITMENTS |
12 |
_ |
_ |
_ |
_ |
|
|
|
|
------------------- |
------------------- |
------------------- |
------------------- |
|
|
|
|
28,793,787 |
30,152,211 |
926,216 |
982,587 |
|
|
|
|
=========== |
=========== |
=========== |
=========== |
|
| FIXED
ASSETS |
|
|
|
|
| Operating
assets |
|
13 |
19,502,437 |
19,638,251 |
627,339 |
639,963 |
|
| Capital
work-in-progress |
|
14 |
34,171 |
165,249 |
1,099 |
5,385 |
|
|
|
|
------------------- |
------------------- |
------------------- |
------------------- |
|
|
|
|
19,536,608 |
19,803,500 |
628,438 |
645,348 |
|
| LONG-TERM
INVESTMENTS |
|
15 |
290,969 |
236,773 |
9,360 |
7,716 |
|
| LONG-TERM
ADVANCES |
|
16 |
1,334,896 |
1,110,708 |
42,940 |
36,195 |
|
| LONG-TERM
DEPOSITS AND OTHER |
|
|
|
|
| RECEIVABLES |
|
17 |
192,048 |
222,414 |
6,178 |
7,248 |
|
|
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
