Govt chalks out framework to revive debt-ridden PIA

The federal government has prepared a major plan to run the Pakistan International Airlines (PIA), which was drowning in debt, under a public-private partnership with foreign capital and restructure the national carrier.

Under the PIA revival plan, a new holding company will be registered with the Securities and Exchange Commission of Pakistan (SECP) and all the assets as well as liabilities of the national carrier will be transferred to it.

The PIA will be incorporated into the holding firm as a debt-free subsidiary company.

According to the framework, 40% of the shares will be sold in the international market to run the national airline under the public-private partnership mode and the management will also be outsourced.

It has also been decided to hire a foreign consultant to finalise the restructuring process in a transparent manner.

The framework prepared by the government will be completed in phases by 2025.
In the first phase, the airline will be separated from debt and losses by registering the holding company with the SECP.

In the second phase, the national airline will be restructured and run through the public-private partnership mode. Its shares will be sold as well.

According to the documents, the PIA’s total loss and debt has reached Rs742 billion, in which Rs350 billion were guaranteed loans, while Rs400 billion were borrowed by pledging the airline’s assets.

On the contrary, the PIA’s assets are worth Rs130 billion and the losses of the national carrier may reach Rs850 billion by the end of this year.

According to the documents, the PIA suffered a loss of Rs110 billion in the one and a half years of the current government.

The total loss of the PIA last year was Rs80 billion, which is expected to be hit Rs112 billion after further increase this year.

The documents revealed that the annual loss of the PIA would reach Rs259 billion in 2030.

The documents read that because of the international sanctions imposed on the Civil Aviation Authority during the tenure of the previous PTI government, the national carrier also faced severe restrictions.

Due to the ban on UK and European flights, the PIA suffered a collective loss of Rs215 billion.

The ban was also causing an annual loss of Rs71 billion to the national carrier.
The PIA landed in hot water in the wake of its flight PK-8303 crashing in Karachi on May 22, 2020, and the subsequent announcement by the then aviation minister Ghulam Sarwar Khan of the grounding of 262 airline pilots suspected of dodging their exams.