CLEARER SKIES AHEAD?
Recent restructuring efforts have started to show results.
PIA posted a pre-tax profit in the first half of this year – its first such gain in two decades.
The airline also resumed flights to Europe in January after a four-year ban over safety issues. It is now reapplying to fly to the United Kingdom, a key lucrative market.
An attempt at privatisation last year attracted only a single lowball offer amid investor concerns over limited management control.
This time, the government is selling a 75 per cent majority stake. Bids are expected from four domestic groups, including a military-backed conglomerate.
The government is also moving to privatise airport operations and services, beginning with the capital’s main hub – the Islamabad International Airport.
“Islamabad is the first one, and I am hoping after this, once we successfully bring the private sector to Islamabad, then we will have more airports go into the private sector hands,” said Muhammad Ali, chairman of the Pakistan Privatisation Commission.
CHALLENGES AHEAD
But PIA does not have as many planes as a national carrier should have, noted Ali.
“PIA has routes, but it doesn’t have the planes to fly. If it can get the planes either at the lease or whatever way it can invest in them, then profitability can improve tremendously,” he told CNA.
On top of that, the prospect of privatisation has triggered protests from the airline’s employees, who fear job losses.
Hidayatullah Khan, president of the PIA employees union, said that whoever takes over the airline is likely to suspend all current employees, and those willing to rejoin will be hired on a contract instead of a permanent basis.
The government hopes to complete the airline’s sale by the end of the year, aiming to stabilise Pakistan’s debt-laden economy and restore investor confidence.
While officials have touted privatisation as a lifeline, experts said any deal alone will not have much impact.
Instead, they said sustained progress will depend on whether Islamabad can push through broader policy and regulatory reforms – beyond just one landmark sale.
“You attract foreign direct investment; you increase your productivity. That is the only way to get rid of the IMF,” said Sajid Amin Javed, deputy executive director of non-profit research organisation Sustainable Development Policy Institute.
“Selling the PIA will not solve your IMF problem or all the economic problems.”
https://www.channelnewsasia.com/asia/pakistan-international-airlines-privatisation-imf-debts-5391386
