PC, PIA keep mum over airline's losses

As the government gears up to sell the loss-making Pakistan International Airlines (PIA), the Privatisation Commission (PC) and the airline's management on Monday ducked questions from a parliamentary panel about false claims of making profit last year.

A member of the National Assembly Standing Committee on Privatisation read out extracts from a finance ministry's report released last week, which showed that PIA incurred a net loss of Rs4.6 billion, contrary to the claims that it earned a profit of Rs26 billion.

"It is very important to keep the record straight and figures should not mislead," remarked MNA Sehar Kamran of the PPP. However, neither Privatisation Secretary Usman Bajwa nor acting PIA CEO Air Vice Marshal Amir Hayat responded to the MNA's questions. In April this year, Prime Minister Shehbaz Sharif praised PIA for showing profit after consistently remaining in losses. However, the finance ministry's report showed the true picture.

The ministry stated that PIA incurred a net loss of Rs4.6 billion and one-off "accounting profit" of Rs26 billion due to treating past losses as future assets "should not be misinterpreted as a sign of operational profitability".

The biannual report on federal state-owned enterprises (SOEs) also highlighted the inefficiencies of PIA, though it had been freed from legacy debt and liabilities.

"Despite the overhaul, PIACL Core still reported a pre-tax loss of Rs4.6 billion for the full year and Rs2.3 billion over six months," said the Ministry of Finance.

Responding to another question, the PIA CEO said that the airline's accounts till June 2025 would be finalised by the end of July.

The secretary, however, responded to other questions. Bajwa said that according to investors' feedback during the last privatisation bid, PIA had 20-25% surplus employees and the average age of aircraft was 18.5 years.

"They think there is 20% fat in PIA" but if the number of aircraft was increased to 38, then there would not be much issue of over-employment, he said, adding that PIA had 6,700 employees compared to 11,000 a few years ago.

The acting CEO said that the overstaffing issue was largely addressed and the employee-to-per aircraft ratio decreased from 550 to 200.

Committee Chairman Farooq Sattar recommended that the government should try to negotiate a minimum three-year retention period for the existing employees.

The fleet age has risen to 18 and a half years and the new investor would have to double the fleet within five years, said the secretary.

The CEO said that the airline is currently flying 19 aircraft, adding that engines of eight Airbus 320 had been replaced, which should help in getting a better price. He said that PIA's key performance indicators have improved in the past one year.

Four parties have pre-qualified for bidding. These include a consortium comprising Lucky Cement, Hub Power Holdings, Kohat Cement and Metro Ventures. The second consortium comprises Arif Habib Corporation, Fatima Fertiliser, City Schools and Lake City Holdings. The third bidder is Fauji Fertiliser Company, owned by the Fauji Foundation. The fourth bidder is Airblue.

The government wants to sell majority shares in PIA along with management control. During the last attempt, it had set the minimum price at Rs85.03 billion with a negative balance sheet of Rs45 billion. Now, the government has taken out more debt from the balance sheet, which should positively impact the minimum price.

The Privatisation Commission had invited Expressions of Interest (EOIs) for divestment of 51-100% share capital of PIA Corporation Limited (PIACL) together with management control.

The pre-qualified parties are "the best of the best" and have sufficient funds for investment in PIA, said Usman Bajwa. He said that the commission had also approached Mian Mohammad Mansha, Pakistan's richest person, to bid for PIA.

The secretary said that the potential buyers would begin due diligence from Tuesday (today) and the commission would try they complete the process in two to three months. The government aims to conclude the transaction in the last quarter of 2025.