Divesting in PIA
Former PIA managers have welcomed the move, but warned that it could get violent.
At long last, the Nawaz Administration is beginning to enact a clear policy agenda meant to set the country on the path of financial self-reliance. The decision to privatise the Pakistan International Airlines is long overdue and we welcome it. We would have preferred an outright sale, but the government’s decision to sell a 26 per cent stake along with managerial control is still a big step in the right direction and a positive macroeconomic signal for entrepreneurs.
The business community has been growing impatient with the government as of late and there was even talk of the administration being an early disappointment. An investment bank, issued a report earlier this week, citing low morale among corporate executives and a waning appetite for capital investment. With this move, the government has taken at least some measures to begin living up to its electoral promises.
Having said that, the task they have chosen to take on is not an easy one. PIA’s union is openly hostile to the privatisation and has vowed to take the matter to court. It is imperative at this point that the government ensure that it has followed the letter and spirit of the law in authorising this transaction. It would be a shame for a sound policy decision to be ruled illegal on a technicality. The union is waiting to pounce on any government slip-ups. The administration must not provide them that opportunity.
Yet, even if they get the technicalities in order, the union does have the upper hand, as the previous government discovered earlier in its term. The pilots’ union, for instance, can institute a ‘go-slow’ protest, where pilots deliberately fly the planes at slow speeds to achieve the dual aim of inconveniencing customers and dramatically increasing fuel costs for the airline. Future buyers will likely know this, which may make it difficult to find investors. Former PIA managers have welcomed the move, but warned that it could get violent. We sincerely hope they are proven wrong.
Published in The Express Tribune, September 16th, 2013.
The business community has been growing impatient with the government as of late and there was even talk of the administration being an early disappointment. An investment bank, issued a report earlier this week, citing low morale among corporate executives and a waning appetite for capital investment. With this move, the government has taken at least some measures to begin living up to its electoral promises.
Having said that, the task they have chosen to take on is not an easy one. PIA’s union is openly hostile to the privatisation and has vowed to take the matter to court. It is imperative at this point that the government ensure that it has followed the letter and spirit of the law in authorising this transaction. It would be a shame for a sound policy decision to be ruled illegal on a technicality. The union is waiting to pounce on any government slip-ups. The administration must not provide them that opportunity.
Yet, even if they get the technicalities in order, the union does have the upper hand, as the previous government discovered earlier in its term. The pilots’ union, for instance, can institute a ‘go-slow’ protest, where pilots deliberately fly the planes at slow speeds to achieve the dual aim of inconveniencing customers and dramatically increasing fuel costs for the airline. Future buyers will likely know this, which may make it difficult to find investors. Former PIA managers have welcomed the move, but warned that it could get violent. We sincerely hope they are proven wrong.
Published in The Express Tribune, September 16th, 2013.