Pakistan Expedites PIA Privatization Amid Financial Strain

Cash-strapped Pakistan is fast-tracking the privatization of its struggling national airline, PIA, by dividing its assets and liabilities between a new management company and a holding company. The government aims to complete this process to alleviate the airline's significant debt and improve operational efficiency.

Cash-strapped Pakistan is expediting the privatisation process of its ailing national flag carrier, Pakistan International Airlines (PIA). A framework has been prepared to divide the airline's assets and liabilities, as part of this move, according to a media report on Monday.

The government disclosed that PIA's assets are valued at Rs 171.43 billion. Once privatisation is complete, these assets and liabilities will be split between a holding company and the new company taking over the airline, The Express Tribune reported.

PIA owes Rs 161 billion to the government and Rs 267 billion to commercial banks, which will be transferred to the holding company. Out of PIA’s Rs 171.43 billion worth of assets, Rs 146.57 billion will go to the new management, while Rs 24.86 billion will remain with the holding company.

Federal authorities are speeding up the privatisation plan and have outlined how assets and liabilities will be divided as part of the process.

PIA's Rs 830 billion deficit will be split, with Rs 202 billion kept by PIA and Rs 628 billion taken by the holding company. Thus, the new company will begin operations with a Rs 55.7 billion deficit, the report said.

Documents indicate that PIA operations will be separated into core and non-core segments. Post-privatisation, Rs 92.62 billion worth of aircraft, technical equipment, operational offices, long-term deposits, and other assets will be transferred to the new management.

Additionally, liabilities like long-term financing of Rs 15.63 billion, aircraft leases of Rs 30 billion, employee salaries of Rs 27.26 billion, and trade payables of Rs 121 billion will be inherited by the new company. Loans from domestic and international sources amounting to Rs 444 billion will be handled by the holding company.