New Delhi: After its airports, the beleaguered Pakistan government wants to privatise its national carrier, which is turning out to be the country’s top loss-making entity. But the decision has come as no surprise given that earlier this year the cash-strapped Shehbaz Sharif government had questioned Pakistan International Airlines Corporation’s demand for $40 million per annum so that it can continue operations.
In the first three months of operation this year, the carrier reported a loss of PKR 38 billion, which is 171% higher than the same period last year, according to reports. Bird strikes (29 were reported in five months in domestic airports), rising fuel prices, limited services due to a ban in Europe and economic and political instability all had a role to play in the downward spiral of PIA.
Even PIAC’s Roosevelt Hotel in New York will be privatised. For this, the Economic Coordination Committee has given the green light for hiring a financial advisor. The carrier and its assets will be added to the list of “active privatisation projects of the ongoing privatisation programme, following an amendment in the law by the parliament,” said the committee in a statement.
The iconic Roosevelt Hotel is one of the most valuable assets owned by PIAC. It is currently on a $220 million three-year lease to the New York City administration.
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Scams and bans
Things were slowly starting to look up for PIA this year. The government was expecting the carrier to be allowed to resume direct flights to European countries after a gap of nearly three years. The ban on direct flights was imposed in 2020 after it was revealed that nearly a third of Pakistani pilots had cheated during their exams. More than 260 of Pakistan’s 860 pilots, including 141 from PIA, which had around 434 pilots, were grounded.
Due to the ban, the airline suffered a collective loss of PKR 215 billion. Their total loss and debt have reached PKR 742 billion.
The federal government has outlined a two-phase plan to bring the national carrier in the green. The first phase involves registering a new holding company and transferring all the assets and liabilities of PIA to it.
In the second phase, the airline will be restructured by a foreign consultant, and 40 per cent of its shares will be sold in the international market to run it as a public-private partnership mode.
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From private to private
PIA traces its genesis to June 1946 when Mohammad Ali Jinnah instructed industrialist MA Ispahani to establish a national airline. Its origins begin with the privately-held Orient Airways founded on 23 October 1946 in erstwhile Calcutta. In January 1955, Pakistan announced its intention to start a state-owned carrier and merged with Orient.
Most have applauded the announcement of the privatisation. One user sarcastically tweeted to give PIA to the army, “they are looking to occupy everything that Pakistan has”.
(Edited by Theres Sudeep)