Achi news desk-
- PIA Briefing THAT the privatization plan.
- Firm government on privatization of bleeding SOEs.
- BoD meeting held in Islamabad.
KARACHI: The privatization plan of Pakistan International Airlines (PIA) has been approved by its recently constituted board of directors, News Geo reported on Tuesday, citing sources.
The plan was shared with the board members of the national flag carrier when different proposals regarding the future of the organization’s employees were also discussed, and the sources shared.
The session, which was held in Islamabad, lasted 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 task during the establishment of the caretaker.
The International Monetary Fund (IMF) has asked the Pakistani authorities to privatize the bleeding state-owned enterprises to revive the ailing economy.
Under the E&Y plan — which was presented before the board — the voluntary retirement plan was also discussed, the sources said, adding that the transaction adviser also proposed to retire the employees who have 4 years of service left.
It is important to note that the BoD of the PIA has been inactive since October 2023 and recently the federal cabinet approved its reconstitution as it is mandatory to seek its approval for the main decisions regarding the company.
PIA privatization plan
In the past, elected governments have shied away from making unpopular reforms, including selling the flag carrier. But Pakistan, in a deep economic crisis, agreed in June to overhaul loss-making state-owned enterprises under a deal with the Fund for a $3 billion bailout.
The government decided to privatize PIA a few weeks after signing the IMF agreement.
The caretaker administration, which took office in August to oversee the February 8 election, was empowered by the outgoing parliament to take any action necessary to meet the budgetary targets agreed with the IMF.
“Our work is 98% done,” said Privatization Minister Fawad Hasan Fawad Reuters last month when asked about the plan to sell the airline. “The remaining 2% is to be brought on 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 has said that losses in 2023 are likely to be 112 billion rupees.
Two sources close to the process said Reuters that a 51% stake with full control would be offered to buyers after parking the airline’s debts in a separate entity, according to the 1,100-page report by Ernst & Young.
Reuters he could not independently confirm the content of the report. Fawad did not give specific details about the size of the stake to be sold, but confirmed that the plan involved the carrier’s debts being turned into a separate entity.
