Pakistan International Airlines Moves Forward with Privatisation Plan as Financial Advisors Submit Key Report
Pakistan International Airlines (PIA), the national carrier of Pakistan, has reached a pivotal moment in its journey towards partial privatisation. The airline’s financial advisors, appointed by the Pakistani government, have officially submitted their much-anticipated report on PIA’s future. This development was confirmed by Pakistan’s Ministry of Privatisation during a meeting on January 25, 2024.
The submitted business plan outlines a comprehensive investment roadmap for PIA, focusing on the airline’s immediate and medium-term financial needs. It aims to transform PIA into a viable and globally competitive airline by addressing its capital and fleet requirements. The plan highlights an immediate funding need of USD 600 million, a continuation of the financial support that PIA has historically required through various capital injections, loans, and bailouts.
Reports from local media indicate that PIA is currently facing operational challenges, with nine of its aircraft grounded due to difficulties in sourcing necessary parts. This situation underscores the urgency of the privatisation plan and the need for investment.
In November, a consortium led by Ernst & Young, including Bauer Aviation Advisory, Haidermota & Co, Freshfield Bruckhaus Deringer, Nutshell, and Knight Frank, was selected to guide the privatisation process. This consortium is reportedly compensated with USD 7 million, payable in instalments contingent upon achieving certain milestones.
The report presented last week is critical for the privatisation process, as it includes asset valuations and recommendations on legal separation of PIA entities, along with valuation methodologies. Fawad Hasan Fawad, Pakistan’s Privatisation Minister, chaired the meeting and suggested minor adjustments for further refinement of the projections. The next step involves presenting this plan to the cabinet for approval.
The current caretaker government in Pakistan strongly supports the idea of selling a 51% stake in PIA, a proposition that has been attempted several times in the past without success. The previous administration renewed efforts in this direction, and the interim government has continued to pursue this agenda. However, finalizing the privatisation process before the general elections on February 8 now appears increasingly challenging, highlighting the complexities involved in this significant transition for Pakistan’s flagship airline.