The privatization of Pakistan International Airlines (PIA) is at a critical juncture, facing potential delays as prospective buyers raise multiple concerns about the terms set by the government in the proposed shareholder and sale-purchase agreements. Originally planned for completion by June-July 2024, the privatization deadline was extended to October 31 due to emerging issues with potential buyers.
Buyers are seeking tax breaks, a reduction in the number of employees they must hire, and further clarity on the airline’s liabilities. Additionally, they are reluctant to accept certain performance targets set by the government, such as increasing the number of aircraft and making a guaranteed investment of $500 million in the airline.
The complexity of privatizing a state-owned entity burdened by inefficiency and significant debt has made the process challenging. The delay has allowed losses and liabilities to compound, making the terms less favorable to potential buyers. It’s becoming increasingly clear that expectations set for potential buyers, such as operating on pre-determined routes, may need recalibration as PIA’s routes may not be as lucrative as believed. Adapting to these changing circumstances is crucial for the success of the privatization process.
The government’s concerns about selling off the airline for less than its worth are understandable, but the urgency of reassessing the terms in the proposed agreements cannot be overstated. It’s essential to ensure that the process does not result in the cannibalization of the airline and that the successful bidder makes adequate investments in PIA, protects the interests of the workforce, and enables the airline to operate as a viable business.
