Pakistan is set to privatize its loss-making national airline, Pakistan International Airlines (PIA), as part of the ongoing privatization program in line with an IMF deal. The decision was made during a meeting of the Cabinet Committee on Privatization, chaired by Finance Minister Ishaq Dar.
The committee agreed to include PIA in the list of active privatization projects after an amendment in the law by the Parliament. Additionally, they approved hiring a financial adviser to handle the transaction of Roosevelt Hotel, New York, an asset of PIA Investment Limited.
PIA’s financial troubles have led to the need for privatization. The airline has faced significant losses and arrears, accumulating hundreds of billions of rupees in losses. The suspension of PIA flights to Europe and the UK since 2020, following a pilot license scandal, added to the challenges.
The IMF’s involvement in Pakistan’s fiscal discipline plans led to the decision for privatization. The government secured a $3 billion IMF bailout in June.
Aviation Minister Khawaja Saad Rafique warned of potential losses amounting to Rs. 259 billion for PIA by 2030 if corrective measures aren’t implemented. He emphasized the need for Foreign Direct Investment (FDI) and granting administrative control to the private sector to sustain the airline.
Despite concerns and opposition from Senators, the path of privatization appears necessary to make PIA a profitable entity. The government hopes to address the financial challenges and improve the airline’s performance through privatization.