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Aftab Maken
ISLAMABAD: Pakistan International Airlines (PIA) recently trumpeted a “profit” of Rs 13.1 billion for the first half of FY2025, a claim that, on the surface, might suggest a miraculous turnaround for the beleaguered national carrier. However, a deeper dive into the government’s own State-Owned Enterprise (SOE) report reveals a starkly different and far more concerning reality: this so-called profit is nothing more than a dangerous accounting gimmick, an elaborate illusion designed to mask PIA’s true, dire financial state, says an official report of the finance ministry.
The core of this deceptive profitability lies in the recognition of a Deferred Tax Asset (DTA) under IAS 12. This highly technical accounting adjustment, while permissible under international standards, has absolutely no bearing on PIA’s operational performance, cash flow, or its ability to stand on its own two feet. In essence, PIA is claiming a future tax saving based on hypothetical profits that, given its current trajectory, are purely imaginary. This is akin to someone claiming future earnings from a lottery ticket they haven’t yet won, while simultaneously drowning in debt.
The CMU report, which provides oversight on SOEs, did not mince words, explicitly warning that this manipulated profit figure “impacts the quality of earnings” and serves to dangerously mislead both the public and policymakers. The harsh truth is that PIA’s actual cash flow remains deeply negative, a critical indicator of a company’s financial health. Despite the paper profit, the airline continues to be a massive drain on the national treasury, perpetually dependent on sovereign guarantees that have now ballooned to an astonishing Rs 269 billion. These guarantees are not a sign of recovery; they are a life support system funded directly by the Pakistani taxpayer, keeping an otherwise insolvent entity artificially afloat.
This deceptive reporting carries severe consequences. By creating an illusion of profitability, PIA is effectively shielding itself from the urgent and painful, yet necessary, restructuring it so desperately needs. While the airline’s operational model remains fundamentally broken, characterized by chronic inefficiencies, mounting losses, and an ever-growing mountain of liabilities, this accounting maneuver allows it to dodge privatization. The government itself has publicly acknowledged that privatization is the “only viable path forward” for PIA. Yet, every fabricated “profit” figure delays this crucial process, allowing the airline to continue hemorrhaging public funds without accountability.
Furthermore, PIA’s drain on the national exchequer extends beyond direct guarantees. The airline has benefited from billions in indirect support, including Rs 7.7 billion collected in indirect taxes that are, ironically, meant to flow into the government’s coffers. This is a perverse scenario where the national carrier effectively retains public funds while offering little in return to the exchequer, unlike its competitors who operate profitably without such taxpayer subsidies. This disparity highlights the fundamental unfairness and unsustainable nature of PIA’s current model.
The bottom line is unequivocally clear: PIA’s reported profit is a fiction, a cunningly crafted narrative designed to buy time and evade the hard realities of its financial quagmire. Every day that genuine reform is delayed, every month that this accounting illusion persists, the national carrier drags the public deeper into a financial black hole. PIA is not flying above its problems; it is plummeting, with the taxpayer caught in its spiraling descent. The charade of profitability is not merely misleading; it is a direct threat to the nation’s financial stability and a grave disservice to the citizens who continue to bear the burden of a perpetually failing enterprise.
