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Pakistan aims to privatise PIA airlines before general elections: Minister

The new plans focus on splitting up PIA with the core airline business being separated from vast peripheral operations

Reuters  |  Islamabad 

PIA
A Pakistan International Airlines (PIA) passenger plane arrives at the Benazir Bhutto International Airport in Islamabad, Pakistan | Photo: Reuters

will try to privatise its national airline before general elections due this year, privatisation minister said, as the ruling party seeks to restart sales of state-run businesses.

Airlines (PIA), haemorrhaging money and losing market share to Gulf-based rivals such as Etihad and Emirates, has been hit by management turmoil in recent years and a 2016 plane crash that led to 47 deaths.

The privatisation of loss-making entities that were draining the exchequer was a key priority for the Muslim League-Nawaz (PML-N) party when it swept to power in 2013.

was among 68 state-owned companies earmaked for privatisation in return for a $6.7 billion Monetary Fund package that helped to stave off a default in 2013.

Despite some initial success, the process stalled in 2016 after staff protests caused havoc with operations and the government passed a law that effectively made it impossible to privatise the airline.

But Aziz, chairman of the Privatisation Commission, told Reuters that new plans have been drawn up to sell off and he would take the proposals to the cabinet committee on privatisation, chaired by Prime Minister Shahid Khaqan Abbasi.

"Next step would be going to the cabinet committee ... and that's imminent, maybe even next week," Aziz said in his Islamabad office this week.

The new plans focus on splitting up the carrier, with the core airline business being separated from vast peripheral operations such as catering, hotels and maintenance, Aziz said. The core airline would then be sold.

HEAVY LOSSES

But to complete the transaction, Aziz said, the government would have to pass laws in parliament to reverse the 2016 legislation that converted into a limited company and effectively barred the government from giving up management control.

The impetus to sell has grown as the airline has piled up huge losses estimated by its former CEO in March at about $30 million a month.

Total debt stood at 186 billion rupees ($1.8 billion) at the end of 2016.

When asked how soon could a buyer could acquire PIA, Aziz said: "Tomorrow morning. If you have the money, come and buy it."

Aziz gave no indication of an expected valuation.

Both Emirates and Etihad had shown interest in buying before the government backed down from privatisation in 2016, the English-language Express Tribune newspaper reported, citing an unnamed official.

Analysts have been sceptical about the government's ability, or willingness, to take on powerful unions and embark on a privatisation process so close to general elections likely in July or August.

Aziz said that, owing to time restraints ahead of the elections, the privatisation commission will focus on one state company per sector, including a bank and an energy company.

He added that there has been "huge interest" in buying Steel Mills, once the pride of Pakistan's industrial output but now shut and bleeding cash.

"We will get runs on the board, but the real challenge is to bring to fruition the two big animals: one is and the other one is Steel Mills," Aziz said.

First Published: Sun, January 14 2018. 21:02 IST
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