ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet has directed that the government prioritize the privatization of Pakistan International Airlines Corporation Limited (PIACL) over restructuring. This decision comes as PIACL grapples with a mounting debt burden, operational challenges, and a bleak financial outlook.
PIACL, a state-owned entity, has been struggling for years to remain financially viable in the face of intense regional competition, internal management issues, and an inability to secure funds for fleet expansion. It is learnt that with the government holding a 92% stake in the airline, its financial troubles have been a cause for concern.
As of December 31, 2022, the airline’s debt and liabilities reached a staggering Rs 743 billion, surpassing the total value of its assets. Operational losses for the last financial year alone stood at Rs 11 billion, contributing to total losses of Rs 86.5 billion.
If PIACL’s financial situation remains unaddressed, projections indicate that its debt and liabilities could skyrocket to Rs 1,977 billion by 2030, with annual losses reaching an unsustainable Rs 259 billion.
Previous efforts to ensure the airline’s sustainability, such as cost-cutting measures, internal management improvements, and government capital injections, have not yielded the desired results. In June 2023, the government initiated a restructuring effort based on recommendations from the Dubai Islamic Bank Consortium Report of 2017.
In a pivotal decision, the ECC has shifted the focus away from restructuring and toward the privatization of PIACL. The Ministry of Aviation has been tasked with collaborating closely with the Privatization Commission to expedite the privatization process.
To facilitate this move, the Aviation Division has been instructed to establish a technical committee. This committee will be responsible for devising a concrete action plan to address PIACL’s outstanding liabilities and ensure a smooth transition to privatization.
