PIA’s privatization plan was “endorsed” by the newly formed board

• The PIA Board has updated the privatization plan.
• Government company to privatize bleeding state enterprises.
• Board meeting in Islamabad.

KARACHI: The privatization plan of Pakistan International Airlines (PIA) has been approved by its recently constituted board of directors, Geo News it said on Tuesday, citing sources.

The plan was shared with the national carrier’s board members during which various proposals regarding the future of the agency’s employees were discussed, the sources said.

The meeting, which was held in Islamabad, continued for four hours, they said.

The government had appointed Ernst & Young – a global financial advisory firm – to prepare the plan for the loss-making company which completed its work during the devolution.

The International Monetary Fund (IMF) has asked Pakistani authorities to privatize bleeding state-owned enterprises to revive the ailing economy.

As part of the E&Y plan – presented to the board – the voluntary retirement program was also discussed, the sources said, adding that the transaction adviser also suggested retirement of employees who have 4 years of service left.

It is important to mention that PIA’s board has been inactive since October 2023 and the federal cabinet has recently approved its reconstitution as it is mandatory to seek its approval for major decisions concerning the company.

PIA Privatization Scheme

In the past, elected governments have shied away from unpopular reforms, including the sale of the carrier. But Pakistan, in deep economic crisis, agreed in June to overhaul loss-making state-owned enterprises as part of a deal with the Fund for a $3 billion bailout.

The government decided to privatize PIA a few weeks after signing the deal with the IMF.

The caretaker government, which took office in August to oversee elections on February 8, was authorized by the outgoing parliament to take the necessary steps to meet fiscal targets agreed with the IMF.

“Our work is 98% done,” said Privatization Minister Fawad Hasan Fawad Reuters last month when asked about the airline’s sale plan. “The remaining 2% is just to bring it in an excel sheet after the cabinet approves it.”

“What we have done in just four months is what previous governments have been trying to do for over a decade,” Fawad said. “There is no looking back.”

Details of the privatization process have not been previously reported.

PIA had liabilities of 785 billion Pakistani rupees ($2.81 billion) and accumulated losses of 713 billion rupees as of June last year. Its CEO said losses in 2023 are likely to be 112 billion rupees.

Two sources close to the process said Reuters that a 51% stake with full management control would be offered to buyers after parking the airline’s debts into a separate entity, according to the 1,100-page report by Ernst & Young.

Reuters could not independently confirm the content of the report. Fawad did not give specific details on the size of the stake to be sold, but confirmed that the plan included breaking up the carrier’s debts into a separate entity.