Ten-year (2008-2017) PIA Audit Report

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Re: Ten-year (2008-2017) PIA Audit Report

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PIA seeks contempt case against ex-CFO

Syed Sabeehul Hussnain

November 06, 2018

ISLAMABAD -
The Pakistan International Airline Corporation Limited on Monday requested the Supreme Court to initiate a contempt of court proceeding against former chief financial officer Nayyar Hayat for disobeying the orders and submitting false, frivolous and misleading facts.

The national flag carrier also requested the top court for lifting the ban on the fresh recruitments to fill the vacant operational positions.

The former Chief Executive Officer (CEO) Rasool Cyan of national flag carrier also requested the top court to issue orders for removal of his name from Exit Control List (ECL).

Advocate Naeem Bukhari filed three separate applications in Supreme Court in a suo motu case regarding the selling of national assets at throwaway prices including Pakistan International Airline (PIA).

The PIACL stated that Hayat was removed as Chief Financial Officer (CFO) in January 2016 by the Board of Directors (BoD) for a fraudulent transaction of accessing provident fund for ongoing expenses in violation of the rules.

It added that in compliance with the top court’s order of PIA’s special audit for the period 2008-2017, all the chiefs were communicated to provide the required information and records.

Numerous reminders were issued by Director Commercial Audit but provision of records was not speedily forthcoming and also not up to the mark after which specific departments were identified including the Finance Department of PIACL which were submitting partial records.

“Moreover, ‘surety/undertaking’ as required by the audit team was still not submitted & remained pending at the end of the then Chief Financial Officer (Nayyar Hayat), whereas all other chiefs & direct reporting divisional heads had submitted the surety/undertaking on the instructions of the Honourable Supreme Court of Pakistan,” the application stated.

“In order to hide his incompetence and mala fide, delays in submission of requisite data and information to the audit team, an alarming activity was undertaken by the CFO, in the form of an unionised letter from the officers under his supervision was written to the Board Audit Committee.

Reportedly, the officers were coerced to sign this letter,” it added

It has been stated that two requisitions in outstanding records were stated to be still pending which are related to the show cause notice issued to Nayyar Hayat.

“The audit report commissioned by the Supreme Court has identified irregular and illegal expenditures amounting to Rs816 billion under the watch of Nayyar Hayat as CFO. This is a clear indictment of his professional work,” the application added.

Hayat had reassigned as Chief Special Projects on August 16, 2018 and

assured he will continue to provide the information pertaining to finance department to the government auditor in compliance with top court’s order.

He (Hayat) has also not complied with the same instructions of the then President & CEO.”

“The process for the closure of route and its studies were started at the time when Nayyar Hayat was holding the charge of acting CEO. In fact most of the spade work on the route closure, its cost implications and future savings were completed and recommended by CFO PIACL, Nayyar Hayat who himself was a strong advocate for route closure and is on record supporting the notion. The route closure minutes were also routed through the CFO who recommended the same to CLO and CEO for approval.”

In another application regarding lifting of ban on recruitment, the PIACL stated that the operations of the company are suffering due to lack of critical skill set available internally.

It assured that all hiring would be carried out on merit with conforming the approved human resource budget and on market rates. The application also requested the top court for permission of renewal of contractual employees.

Cyan in his application stated that former and current MDs and chairmen have been allowed by this court to travel abroad.

Cyan stated that he has already deposited Rs2.3 million with PIA being the cost of passengers who had been taken by PIA on the inaugural Air Safari Trip to promote the flight for additional revenues despite the passengers were selected by Commercial Department.

Cyan stated that he has to attend his property matter in US further undertaking that he will appear within three days of notice by the top court as required by the auditors.

He requested the top court for deletion of his name from ECL. The top court on September 3, 2018 had directed the federal government for necessary steps to appoint a new CEO of PIA on merit.

Source: The Nation
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Re: Ten-year (2008-2017) PIA Audit Report

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The Supreme Court of Pakistan has sought reply from PIA on Auditor General's report.

The court remarked that audit report is postmortem of the airline and will help in diagnosing the disease it suffers from.

Auditor General's reply is sought on the removal of the name of former President & CEO PIA Musharraf Rasool Cyan from Exit Control List (ECL).

Next hearing of the case will take place on November 16.

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Re: Ten-year (2008-2017) PIA Audit Report

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PIA revenue up by 2.5pe, expenditure by 8.89pc in 10 years

By Our Staff Reporter | 11/15/2018 12:00:00 AM

ISLAMABAD:
A fresh special audit report on the accounts of the Pakistan International Airlines (PIA) between 2008 and 2017 indicated that the national flag carrier lost its market share drastically both on domestic and international routes during that period as the number of itspassengersdechned.

The report submitted to the Supreme Court suggested that 5.6 million passengers travelled by the PIA in 2008, but this number fell to 5.48m in 2016, while the market grew manifold during this period.

The apex court is seized with a case regarding reports that accumulated losses of the airline stood at Rs360 billion, while total liabilities amounted to Rs406bn by the end of last year against its assets of Rs111bn, besides plans were afoot to sell it off at a throwaway price.

Earlier, a similar report of the Auditor General of Pakistan had blamed the absence of professional and experienced leadership for the present state of affairs of the national carrier, regretting that it was being run like a non-business entity.

The fresh audit report stated that other airlines like Emirates, Qatar, Etihad and Turkish took advantage of the revised aviation policy in Pakistan and increased their flights from different locations and attracted PIA passengers by of fering them more value for money.

An analysis of traffic information showed that over the years the PIA lost passengers, mostly due to a reduction in flights and Available Seat Kilometres.

PIA`s revenue was Rs88.8bn in 2008 and Rs91.2bn in 2017, showing a slight increase of 2.5 per cent, while its expenditure went up by 8.89pc to Rs136bn from Rs125bn during this period.

The airline sustained a net loss of Rs36.2bn in 2008 and Rs44.9bn in 2017 and due to huge fixed cost under the head of salary, finance cost and exchange loss, it was overburdened heavily.

The audit report regretted that the air-line was unable to continue as a going concern without the government`s support as it had accumulated losses of Rs361bn up to December last year.

The cost of sales is 116pc of the revenue which ef fectively means that the PIA sustained operational loss to the extent of 16pc of its revenue and the management failed to take necessary measures to slow down or reverse the trend of increasing cost of services and spiralling fixed costs.

The management never undertook any austerity measures to cut the costs because they knew that in the end, the government will infuse more equity to bail out the airline. The overall loss will further increase in the coming years due to increase in the cost of services, unance cost and other related costs.

Due to financial constraints, the audit report regretted, the PIA had been acquiring aircraft on both dry and wet lease since 2007. The audit team observed a number of irregularities in leasing of aircraft like no due diligence/preparation of feasibilities showing no commercial, financial and engineering viabilities.

All the feasibilities during the past 10 years are devoid of outputs projected in them, the report said and added that obsession for Airbus A320 and AT R-72 aircraf t had been noticed since 2013-17 without realisation of the airline`s commercial interest. Only A320 has been preferred in all procurements when other aircraft like A330 and A319 were offered at very good rates,the reportsaid.

Likewise, ATR-72 aircraft were purchased beyond the existing need, hence the airline was overburdened with billions of rupees of expenditure without a single penny of profit f rom AT Rs.

Ironically, the PIA did not have maintenance and overall capabilities for Airbus A320 and ATR inducted between 2014 and 2015, including in-house engine repair/ overhaul capabilities. The airline inducted 11 A320 and ATR-72 aircraft, but due to the absence of such capabilities expenses of maintenance and overhaul and engine rentals have increased beyond Rs16bn, the report said.

Apart from revenue on passengers, the cargo has dropped dramatically due to leasing of narrow-body aircraft. The PIA earned cargo revenue of Rs5.4bn in 2008, which fell to Rs3.6bn in 2016, as compared to 20pc of total revenue as per industry practice.

Source: DAWN

Staff lacks skills, PIA admits before SC

By Hasnaat Malik

Published: November 15, 2018

ISLAMABAD:
The Pakistan International Airlines (PIA) on Wednesday admitted before the Supreme Court that the Human Resource (HR) Department, despite being over-staffed, “lacks quality”, “out of box thinkers” and “energetic professionals”.

The reply was submitted with the court in response to the Attorney General for Pakistan’s previous month’s report on reasons behind PIA’s accumulated losses.

The PIA management, through its counsel Naeem Bukhari, submitted a multi-volume reply wherein it was stated that the HR department needed an overall upgradation to cope with the challenging business environment.
“Unfortunately, the PIA HR Department has not undergone any major change since its inception, which has been quite detrimental for the department itself as well as for the overall working of the organisation as HR constitutes the backbone of any organisation,” said the reply. “It is a dilemma that no one has acknowledged the significance of the HR and the department is still stuck in the traditional approaches of administration and personnel.”

It further said that most of the people in the HR department lacked appropriate educational background as they were conventional in their approach and resistant to change, adding that they did not want to deviate from their age-old practices and comfort zone.

The PIA said that the management was working on a concrete and elaborate plan to uplift and empower the HR department.

“A two-pronged strategy is being adopted as a capacity building measure for the HR department, including changing the attitude of the workplace,” it added. “We are also developing a comprehensive reward and punishment programme to improve the overall performance of the HR whereby employees will be motivated to work an extra mile for which they will be duly rewarded, but at the same time fearing consequences for their slackness.”

It’s also expected that with the change of leadership of the HR department, things would get better soon.

On making permanent 4,922 contract employees on the directives of the federal government, which resulted in additional expenditure of Rs101.615 million, the PIA said the staff was regularised in light of the federal government notification dated August 29, 2008.

In 2008, the PIA was a government-owned entity and bound to implement the decision of the federal government, whereas Rule 5 of the Public Sector Companies (Corporate Ordinance) Rules was issued in 2013.

The PIA stated that a reply might be sought from the Ministry of Defence/Aviation Division in this regard.

About the appointment of 457 employees on fake degrees by the PIA’s management, the reply stated that the AGP’s report itself highlighted that the national flag carrier had taken action on all cases against fake/bogus degree holders and approximately 46 per cent fake/bogus degree holders had been dismissed whereas approximately 51 per cent fake degree holders approached the court of law and obtained a stay order.

The court cases, now, were being proactively followed by a legal team. Likewise, less than 3.0 per cent (13 out of 457) cases were under process of verification from the concerned universities’ boards.

On the loss of expenditure of approximately Rs165.481 million, the reply stated that most of the officers were removed from their position and were kept without assignments for several reasons like gross misconduct, litigation, incompetency, attitudinal issues and false claims.

Among other things, the AGP in the report had stated that PIA had been run like a non-business entity, governed by an unprofessional Board of Directors and managed by a chief executive officer, who lacked industry-specific experience.

Source: tribune.com.pk
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Re: Ten-year (2008-2017) PIA Audit Report

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PIA, suffered Rs361 bn loss in 10 years, audit reveals

ISLAMABAD:
As the government struggles to shore up its finances and create fiscal space for delivering better governance and drive socio-economic agenda as promised on the July elections trail, state-owned enterprises continue to bleed the public expenditure with Pakistan International Airlines (PIA) accumulating a whopping Rs361 billion loss over the last 10 years.

The audit of the PIA reveals that the institution has been run like a non-business entity, governed by non-professional board of directors and managed by CEOs lacking industry-specific management experience and exhibiting total absence of prudence, due diligence and best industry practices and decisions are taken on the basis of ad-hocism.

As per audit findings, the losses by PIA were incurred also due to bad decisions regarding hiring, procurement of different material including spare parts, operation expenditures, hotels, sale of routes to other airlines and in operation of premier flights from Pakistan to UK.

The audit report, a copy of which is available with The News, reveals that the PIA BoD was routinely nominated without any criteria as none of the members possessed aviation industry experience. So much so that the BoD could not even finalise financial statements or fix timelines for policy decisions and route opening/closing and determine airfare. Similarly, the BoD performance was never evaluated while Secretary Finance of the BoD remained absent from 71 percent meetings for evaluation.

Sources told this correspondent that when the Auditor General’s office asked the PIA to reply objections raised by their teams, they never responded despite a lapse of two months. However, former boss of the PIA Shujaat Azim submitted reply to the AG office about the expenditures during his tenure.

As per the audit report, the PIA owned 35 aircraft and this number decreased to 12 in 2017. On the other side, the PIA had seven aircraft on dry lease in 2008 and in 2017 the number of aircraft on dry lease was 20. In 2008, the PIA’s revenue was Rs88.8 billion and expenditure stood at Rs125 billion causing a loss of Rs36.14 billion.

In 2017, after 10 years, the PIA revenue rose to Rs90.5 billion and expenditures went up to Rs134.33 billion, causing a loss of Rs43 billion in one year, reads the audit report presented before the Supreme Court of Pakistan.

Documents available with The News showed the PIA faced major loss of Rs117 billion due to aviation policy. As result of that policy, eight foreign airlines took advantage and the PIA lost its passengers travelling from Pakistan to countries. (USD was calculated @ Rs110). In 2017, total 4.72 million passengers travelled to other countries through foreign carriers.

Major losses caused to the PIA include Rs1 billion in purchase of medicine, Rs1.7 billion in irregular award of contract to daily-wage employees, Rs3.33 billion due to excess strength of human forces than sanctioned numbers, Rs33 billion due to dry lease, Rs10 billion in wet lease contract and Rs12 billion due to leasing on higher rates in comparison with other airlines, read the audit report.

Other major areas which caused loss to the PIA include improper implementation of the BoD decision (Rs13 billion), revenue decline due to imprudent merger of fuel surcharge in base fare (Rs46 billion), loss by misusing reservation booking data by travel agents (Rs44.5 billion), non-recovery of defaulting travel agents (Rs3.2 billion), and discrepancy in passenger ticket sales and number of passengers actually travelled (Rs32.1 billion).

Then came the area of revenue leakages where the PIA lost minimum Rs13 billion and another Rs38 billion due to inefficient engineering and maintenance. Then poor supply chain and contract management caused total loss of Rs23 billion in these years and another loss of Rs13 billion was caused due to inefficient fuel management.

Source: The News
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Re: Ten-year (2008-2017) PIA Audit Report

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More than 134 billions rupees corruption in PIA during last ten years revealed. Federal Investigation Agency (FIA) has opened thirty cases for investigation.

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Re: Ten-year (2008-2017) PIA Audit Report

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* Irregularities of 134 billion rupees observed in ten year (2008-2017) audit report of PIA.

* FIA Corporate Crime Circle in Karachi has registered 30 inquiries.

* Legal proceedings to be initiated on the cases of corruption, irregularities, illegal appointments etc.

* Appointment of German national Bernd Hildenbrand as airline's CEO in violation of procedures.

* Appointment of Salim Sayani as airline's Deputy Managing Director in violation of procedures.

* Appointment of a foreign national as consultant caused loss of USD 64,500/-.

* Appointment of 457 employees with fake educational documents.

* Establishment of PIA Flight Academy in Nawabshah caused loss of PKR 160,000,000/-.

* PIA's controversial agreement with Sabre cause loss of millions of rupees.

* Wrong/incorrect implementation of Board of Directors decisions caused loss of 12.94 billion rupees.

* Misuse of tickets reservation caused loss of 44.51 billion rupees.

* Free tickets to employees and others caused loss of 5.55 billion rupees.

https://www.express.pk/story/1450810/1/

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Re: Ten-year (2008-2017) PIA Audit Report

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According to 2008-2017 ten-year PIA audit report:

* Misuse of reservation business designator by PIA administration caused loss of 54 billion rupees.

* Agreement with Trans World Aviation for spare parts done in non-transparent manner caused loss of more than 18 billion rupees.

* Steps not taken according to decisions made by PIA Board of Directors caused loss of 13 billion rupees.

* Aircraft spare parts not used caused loss of 9 billion rupees.

* ATR 72-500 aircraft acquired on dry lease in haste caused loss of more than 8 billion rupees.

* Engines of grounded aircraft not sold at proper time caused loss of more than 6 billion rupees.

* Free tickets given to irrelevant people caused loss of 5.5 billion rupees.

* Acquisition of Airbus A320 on high dry lease rates caused loss of 5 billion rupees.

* Loss of 3.5 billion rupees in the sale of Airbus A310-300 aircraft.

* Start of PIA Premier Service caused loss of 3 billion rupees.

* Boeing 777 cabin upgrade caused loss of 2 billion rupees.

* Supply of meals by technically disqualified firm caused loss of 1.73 billion rupees.

* Loss of 2 billion rupees due to defaulter agents.

* Loss of 1.50 billion rupees due to extra salaries paid to pilots.

* Loss of 1 billion rupees due to non-transparent agreements for the procurement extra equipment and spare parts.

* Loss of 1 billion rupees due to delay in maintenance/repair of aircraft.

* Consultancy agreement for improving flight kitchen services caused loss 68 crore rupees.

* Airbus A320 induction agreement caused loss of 65 crore rupees.

* Multiple ticket refunds caused loss of 64 crore rupees.

* Sale of aircraft on hard block basis caused loss 58 crore rupees.

* Procurement of parts not required caused loss of 37 crore rupees.

* Sale of Airbus A310-300 in connivance caused loss 23 crore rupees.

* Acquisition of iPads caused loss of 10 crore rupees.

Info Source: https://e.dunya.com.pk/detail.php?date= ... 9_51441804

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Re: Ten-year (2008-2017) PIA Audit Report

Post by arshad.altaf »

10 crore rupees worth of ipads!? Never saw anyone at check in or anywhere else carrying an ipad in PIA flights. Unless they were for the cockpits. But that too 10 crore rupees? The number is mind boggling.

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Re: Ten-year (2008-2017) PIA Audit Report

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According to ten-year (2008-2017) PIA audit report excerpts in December 24 edition of Urdu daily 'Nai Baat':

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https://e.jang.com.pk/12-24-2018/Multan ... me=948.png

* Previous governments and PIA managements got blackmailed by pilots.

* Extra payments other then allowances were made to pilots. Payments were made other then allowance based on minimim flying hours.

* Fifty to seventy-five as minimum flying hours gave undue benefit to pilots.

* There were/are more pilots than required for airline's aircraft fleet.

* First Officers of grounded Boeing 737-300 aircraft kept getting salaries.

* Fuel management was not done correctly due to inept/incapable management.

* PIA revenue crossed 100 million rupees mark three times under Pakistan People's Party (PPP) government.

* PIA revenue crossed 100 million rupees mark not even once under Pakistan Muslim Leage - Nawaz (PML-N) government.

* PML-N government five-year tenure was worst in terms of losses suffered by PIA.

* 436 billion rupees spent on fuel bills in ten years. Fifty-seven percent was spent on fuel in 2013. Thirty percent was spent on fuel in 2016.

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