PIA net profit likely to grow by 47 percent

KARACHI (March 30 2004): Pakistan International Airlines (PIA) net profit is expected to record an increase of 47 percent for the year ended on December 31, 2003, on the back of higher passenger traffic and reduction in financial costs.

PIA is expected to announce its financial results for 2003 on Tuesday through Karachi Stock Exchange.

Muneeza Imtiaz, research analyst from AKD Securities, said that top line of the company may show an increase of 16 percent, inclusive of a 17 percent surge in passenger revenues alone. On the back of higher passenger traffic, she expects PIA's 'Available Seat-Kilometres' (ASK) and Revenue-Passenger-Kilometres (RPK) to record a growth of 8 percent and 11 percent respectively.

The company claims to have surpassed its own previously set pre-tax target, and is now expected to announce a pre-tax profit of Rs 3.7 billion, which translates into a net after-tax profit of Rs 2.7 billion, a growth of 47 percent compared to Rs 1.8 billion during 2002.

“Our fully diluted EPS for 2003 stands at Rs 1.3 relative to Rs 0.89 in 2002 on total shares outstanding of 2.1 billion up to 2007”, she said. PIA's paid-up capital on the financial books in 2003 is expected to equal Rs 11.6 billion, while by end 2004, the paid-up capital may increase to Rs 16.6 billion.

Muneeza said that Turkish Airlines has recently awarded PIA the contract to overhaul 10 planes, while Emirates Airline's top management also visited PIA a few weeks ago to discuss possibilities of a similar agreement.

The engineering service income contributes about 4.5 percent to the top line, which can potentially improve further if other airlines strike similar deals with PIA.

Going forward, PIA is among the beneficiaries of improving geo-political and economic outlook and specially the reforms introduced by the government for Public Sector Entities (PSEs) and improving ties with India.

On the back of rising passenger traffic volumes, as a result of high sustained economic growth, improved operational efficiency, further route-rationalisation and restructuring of its fleet, PIA's top line may grow at CAGR of 11 percent for the next four years.

The induction of three Boeing 777s during FY04 and introduction of new routes should prove profitable for the company and in 2004 the earning per share may improve to Rs 1.58 on adjusted outstanding shares along side a top line growth of 14 percent.

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