ISLAMABAD: The Privatisation Commission (PC) Board has tasked Financial Advisor Ernest & Young-led consortium to prepare a plan for the privatisation of Pakistan International Airlines Corporation Limited (PIACL) by end of December 2023, sources in the PC told Business Recorder.
On Friday (November 10) the interim cabinet approved the hiring of Ernst & Young-led consortium as FA for PIACL privatisation targeted to sell the loss-making entity by the end of its tenure.
Sources told Business Recorder that the decision to select the FA was made during the visit of the International Monetary Fund (IMF), and the caretaker government assured the Fund that the PIACL transaction would be completed in the earliest possible time.
The staff-level agreement (SLA) with the IMF was reached on Wednesday, and the subsequent press release by the Mission leader stated: “Continuing state owned enterprise and government reforms to improve the business environment, investment and job creation.
Following passage of the state owned enterprises (SOE) law, the authorities are moving forward with their SOE policy and implementation of their triage plan including the privatization of select SOEs.“
A delegation from the International Civil Aviation Organisation (ICAO) was in Pakistan from November 5 to 10 and concluded an audit of the Civil Aviation Authority (CAA). The approval from the ICAO is critical to recommencing flight operations to Europe and the UK, following a ban effective from July 2021 onwards, to reduce the financial losses.
Recently Pakistan State Oil suspended the supply of fuel to the national airline due to payment issues. This led to the cancellation of hundreds of flights, pushing PIA on the verge of collapse.
During the crisis, the already debt-ridden carrier suffered financial losses of about Rs300 million daily, an official of PIA told Business Recorder on condition of anonymity.
The financial losses of PIA have been projected to reach Rs 153 billion in 2023-24 alone. PIA has suffered a total of $7.1 billion losses since 2012.
“The government has announced that PIA’s legacy liabilities would be parked in a holding company and only the current core assets and current liabilities would be offered for privatization,” interim Privatization Minister Fawad Hasan Fawad said in a press conference in October 2023.
Fawad said the list of assets to be sold includes PIA’s aircraft, routes, landing rights, core engineering and air service agreements.
With a 28 percent share in Pakistan’s 17 million annual air passenger market, PIA is still the largest single airline in the country.
According to the country’s Civil Aviation Authority, 40 percent of domestic air travellers and just 22 percent of international travellers used PIA in 2021-22 fiscal year.
Copyright Business Recorder, 2023