The board of directors of Pakistan International Airlines (PIA) has given its approval to the privatisation plan, multiple sources confirmed The Scoop.
The plan was presented to the national flag carrier’s board members during a session held in Islamabad, where various proposals regarding the future of the organization’s employees were discussed. The session lasted for four hours, according to the sources.
The government had tasked Ernst & Young, a global financial advisory firm, with preparing the plan for the financially troubled PIA, a task which was completed during the caretaker setup. The International Monetary Fund (IMF) has urged Pakistani authorities to privatize state-owned enterprises to revive the struggling economy.
According to the plan presented to the board by Ernst & Young, a voluntary retirement scheme was discussed, along with a proposal to retire employees with four years of service left. It’s worth mentioning that PIA’s Board of Directors had been inactive since October 2023, and its reconstitution was recently approved by the federal cabinet, as it is mandatory for major decisions regarding the company.
In the past, elected governments have been reluctant to implement unpopular reforms such as selling the flag carrier. However, Pakistan, facing a severe economic crisis, agreed in June to revamp loss-making state-owned enterprises under a $3 billion bailout deal with the IMF. The decision to privatise PIA was made just weeks after signing the IMF agreement.
Privatisation Minister Fawad Hasan Fawad stated that the government’s efforts in privatising PIA have been significant, with 98% of the work completed. The remaining 2% involves finalizing the details after the cabinet approves the plan. The details of the privatisation process, including offering a 51% stake with full management control to buyers and segregating the airline’s debts into a separate entity, were outlined in the 1,100-page report from Ernst & Young.
While Reuters could not independently confirm the report’s contents, Fawad confirmed that the plan includes separating the carrier’s debts into a separate entity. PIA, burdened with liabilities of 785 billion Pakistani rupees ($2.81 billion) and accumulated losses of 713 billion rupees as of June last year, faces significant financial challenges.
