Pakistan Seals Plan to Sell National Airline
Ahead of elections next week, Pakistan’s caretaker administration is finalizing plans to sell the country’s loss-making flagship carrier, Pakistan International Airlines (PIA). The decision to privatize the airline comes as part of a larger effort to overhaul state-owned enterprises in order to alleviate the country’s deep economic crisis and secure a $3 billion bailout from the International Monetary Fund (IMF).
The caretaker administration, which took office in August, has been authorized by the outgoing parliament to take necessary steps to meet the budgetary targets agreed upon with the IMF. Privatization Minister Fawad Hasan Fawad stated that the plan, prepared by transaction adviser Ernst & Young, will be presented to the cabinet for approval before the administration’s tenure ends following the election.
The proposed plan suggests offering a 51% stake in PIA, along with full management control, to potential buyers. The airline’s debts would be transferred to a separate entity to facilitate the sale. These measures aim to attract investors while ensuring the financial stability of the airline.
PIA has been burdened with liabilities of 785 billion Pakistani rupees ($2.81 billion) and accumulated losses of 713 billion rupees as of June last year. The airline’s chief executive predicts further losses of 112 billion rupees in 2023. Consequently, progress on the privatization of PIA will be a crucial consideration if the incoming government seeks additional financial assistance from the IMF after the current bailout program concludes in March.
While the decision to sell the national airline may be viewed as controversial, the caretaker administration and the transaction adviser, Ernst & Young, are determined to move forward with the privatization plan. Fawad expressed confidence in their progress, comparing it to the efforts of past governments that spanned over a decade without achieving the desired results. The management of PIA has also pledged its full cooperation in the process.
In order to expedite the sale, the caretaker government has amended a 2016 law that previously hindered the majority share sale of PIA. This allows for a more streamlined and swift privatization process, which incoming Finance Minister Ishaq Dar has vowed to facilitate if his party forms the next government.
As Pakistan’s economy stands at a critical juncture, the fate of PIA’s privatization will have far-reaching implications. The decision to sell the national airline demonstrates the commitment of the caretaker administration in addressing the country’s economic challenges. However, it remains to be seen how potential buyers will respond to this opportunity and how the new government, once elected, will navigate the future of Pakistan’s aviation industry.
In conclusion, the caretaker administration is poised to sell Pakistan International Airlines as part of their efforts to address the country’s economic crisis. The proposed plan, prepared by transaction adviser Ernst & Young, will be presented to the cabinet for approval. The incoming government’s decision regarding PIA’s privatization will play a significant role in the country’s future economic trajectory.
