• PIA BoD briefed privitisation plan.
  • Govt firm on privitaising bleeding SOEs.
  • BoD meeting held in Islamabad.

KARACHI: The privatisation plan of Pakistan International Airlines (PIA) has been endorsed by its board of directors which was recently constituted, Geo News reported Tuesday, citing sources.

The plan was shared with the national flag carrier’s board members during which different proposals regarding the future of the organisation’s employees also came under discussion, the sources shared.

The session, which was held in Islamabad, continued for four hours, they said.

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 discussed, the sources said, adding that the transaction advisor has also proposed to retire the employees 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 cabinet recently approved its reconstitution as it is mandatory to seek its approval for the major decisions regarding the company.

PIA privatisation plan

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 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 Feb 8 election, was empowered 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 last month 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 rupees 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 details 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.

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