From Zeeshan Mirza
KARACHI: The privatisation and restructuring plan of Pakistan International Airlines (PIA) on Tuesday was approved by its board of directors which was recently constituted.
The 83rd meeting of the PIA’s board of directors was held on March 25 during which the scheme of arrangement for the airline’s privatisation and restructuring was approved, as per the official an-nouncement.
The board of directors will coordinate with the Securities and Exchange Commission of Pakistan (SECP), said the statement. Meanwhile, as per the sources, the plan also discussed different proposals regarding the future of the organisation’s employees.
The government had appointed Ernst & Young — a global financial advisory firm — to prepare the plan for the loss-making firm which completed its task during the caretaker setup.
The International Monetary Fund (IMF) has asked the Pakistani authorities to privatise the bleeding state-owned enterprises to revitalise the sick economy. Under the E&Y plan — presented before the board — the voluntary retirement scheme was also dis-cussed, the sources said, adding that the transaction advisor has also proposed to retire the employ-ees who have 4 years of service left. It is important to mention that the PIA’s BoD has been inactive since October 2023 and the federal cab-inet recently approved its reconstitution as it is mandatory to seek its approval for the major decisions regarding the company.
In the past, elected governments have shied away from undertaking unpopular reforms, including the sale of the flag carrier. But Pakistan, in deep economic crisis, agreed in June 2023 to overhaul loss-making state-owned enterprises under a deal with the Fund for a $3 billion bailout.
The government decided to privatise PIA just weeks after signing the IMF agreement.
The caretaker administration, which took office in August to oversee the February 8 election, was em-powered by the outgoing parliament to take any steps needed to meet the budgetary targets agreed with the IMF.
“Our job is 98% done,” Privatisation Minister Fawad Hasan Fawad told Reuters when asked about the plan to sell the airline. “The remaining 2% is just to bring it on an excel sheet after the cabinet approves it.”
“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.”
Details of the privatisation process have not been previously reported.
PIA had liabilities of 785 billion Pakistani rupees ($2.81 billion) and accumulated losses of 713 billion ru-pees as of June last year. Its CEO has said losses in 2023 were likely to be 112 billion rupees.
Two sources close to the process told Reuters that a 51% stake with full management control would be offered to buyers after parking the airline’s debts in a separate entity, under the 1,100 page report from Ernst & Young.
Reuters could not independently confirm the contents of the report. Fawad did not give specific de-tails of the size of the stake to be sold, but confirmed the plan involved the carrier’s debts being spun off into a separate entity.
