Less than 48 hours before the general elections, the federal cabinet has given its approval for the reorganization of Pakistan International Airlines (PIA), as reported by state-run Radio Pakistan. The move comes after the Election Commission of Pakistan (ECP) requested the government to refrain from further action regarding the privatization of PIA until it receives formal clearance and all relevant documents.
During the cabinet meeting chaired by caretaker Prime Minister Anwaarul Haq Kakar, approval was given for the appointment of a financial advisor to oversee the financial and administrative restructuring of PIA. The plan includes splitting PIA into two companies, TopCo and HoldCo, in order to attract investors. In addition, a sub-committee on privatization has been directed to expedite matters related to state-owned entities’ unresolved claims against PIA.
The decision to privatize PIA was made after Pakistan agreed to reforms under a $3 billion bailout from the International Monetary Fund (IMF). The caretaker government, which was granted authority to take necessary measures to meet IMF targets, is nearing the end of its term, with Privatization Minister Fawad Hasan Fawad reporting that 98% of the job has been completed.
PIA is facing a financial crisis, with liabilities of Rs785bn and accumulated losses of Rs713bn, as well as governance and safety concerns. It has also been dealing with the aftermath of a scandal involving fake pilot licenses and a ban on flying to lucrative routes in Europe and the UK. The ban has caused the airline to lose nearly Rs40bn in revenue annually, and it is now seeking to resolve the issue with the European Union Aviation Safety Agency. Additionally, PIA has experienced aircraft seizures by creditors due to non-payment of lease fees and ground handling charges.
Overall, the decision to restructure PIA comes amid growing concerns about the airline’s performance and financial stability.