Pakistan seals plan to sell national airline ahead of election

Pakistan in June 2023 agreed with IMF to revamp PIA that was long steering through substantial losses
An undated image of a PIA aircraft. — AFP

An undated image of a PIA aircraft. — AFP

The caretaker government of Pakistan is devising plans for the upcoming government to sell Pakistan International Airlines (PIA) ahead of the Fawad Hassan Fawad.

Previous government refrained from administering exceptional reforms of such calibre that encompassed the sale of the government-owned flag carrier.

However, as part of a $3 billion bailout programme with the International Monetary Fund (IMF) in June 2023, Pakistan agreed to revamp the state enterprise that was long steering through substantial losses, following which the government decided to privatise PIA. 

Read more: PayPal set to enter Pakistani market

Taking office in February last year, the interim government was encouraged by the outgoing government to undertake any steps that were deemed appropriate to meet the budgetary targets —  agreed upon with the IMF — meet. 

"Our job is 98% done. The remaining 2% is just to bring it on an Excel sheet after the cabinet approves it," the minister told Reuters. 

He stated that the proposal, prepared by transaction consultant Ernst & Young, will be submitted to the cabinet for endorsement before the current administration's term concludes after the election. Additionally, the cabinet will determine whether to auction the share or pursue a government-to-government agreement, according to Fawad. 

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

PIA had total liabilities of Rs 785 billion ($2.81 billion) and had accumulated losses of Rs 713 billion as of June last year. The CEO stated that it is likely to incur losses of Rs 112 billion in 2023.

The progress of the privatisation will be a crucial issue if the incoming government decides to return to the IMF once the current bailout program ends in March. Caretaker Finance Minister Shamshad Akhtar mentioned last year that Pakistan would need to continue participating in IMF programs after the current one expires.

According to sources familiar with the matter, a 51% stake with full management control will be offered to potential buyers after transferring the airline's debts to a separate entity, as outlined in the 1,100-page report from Ernst & Young.

Fawad did not provide specific details on the size of the stake to be sold but confirmed that the plan involves separating the carrier's debts into a separate entity.

PIA spokesprson Abdullah Hafeez Khan stated that the airline is actively supporting the privatisation process and is providing "full cooperation" to the transaction adviser.