Pakistan International Airlines (PIA) has taken a step towards privatization. The airline’s newly formed board of directors has given its approval to the privatization plan during a recent meeting.
The meeting, held in Islamabad, saw discussions on various proposals regarding the future of PIA’s employees. The session, lasting for about four hours, emphasized the need for particular consideration of the organization’s direction.
The government had previously tasked Ernst & Young, a global financial advisory firm, with preparing the privatization plan for the struggling airline. The completion of this task during the caretaker setup paved the way for further progress.
The decision to privatize PIA aligns with the IMF’s recommendation to Pakistan to revitalize its economy by privatizing state-owned enterprises. Among the proposals presented to the board was a voluntary retirement scheme, which included retiring employees with four years of service remaining.
It’s noteworthy that the PIA’s board of directors had been inactive since October 2023. However, the federal cabinet recently approved its reconstitution, underscoring its significance in major decisions regarding the company’s future.
Pakistan’s current administration has committed to overhauling loss-making state-owned enterprises, following a deal with the IMF for a $3 billion bailout.
The caretaker administration, empowered by the outgoing parliament to meet IMF-agreed budgetary targets, has been instrumental in driving the privatization agenda forward. Privatisation Minister Fawad Hasan Fawad expressed confidence in the progress made, stating that the remaining steps are minor and awaiting cabinet approval.
The privatization process entails offering a 51% stake with full management control to potential buyers. This move is set to be accompanied by the segregation of the airline’s debts into a separate entity, as outlined in a report from Ernst & Young.
While specific details regarding the size of the stake to be sold were not disclosed, Fawad confirmed that the plan involves the separation of the carrier’s debts into a distinct entity.
As PIA moves closer to privatization, the decision underscores the government’s commitment to economic reform and restructuring, with a focus on improving the airline’s financial health and overall efficiency.
