The government of Islamabad has put together an extensive plan to revitalize Pakistan International Airlines (PIA) through external investments under a public-private partnership. The national airline, burdened by heavy debts, has finalized its recovery strategy.
To implement the plan, the Securities and Exchange Commission has decided to establish a holding company and transfer all assets and liabilities of PIA to this new entity. Consequently, PIA will function as a debt-free subsidiary within the holding company. This restructuring process will be carried out in phases and is set to be completed by 2025.
The rehabilitation of PIA will occur in two stages, aiming to transform the airline into a profitable and debt-free organization. As part of the process, 40 percent of PIA’s shares will be made available for sale in the international market, and management will be outsourced along with another 40 percent of the shares. To ensure transparency, a foreign consultant will be hired to oversee the restructuring.
Presently, PIA’s total debt and losses have reached a staggering 742 billion rupees. The airline has obtained 350 billion rupees in guaranteed loans, using its assets, worth 400 billion rupees, as collateral. However, the national carrier’s own assets are valued at 130 billion rupees, and it is projected to accumulate a financial deficit of 850 billion rupees by the end of the year.
During the past year, PIA incurred a loss of 110 billion rupees under the current government’s tenure. In 2022, the airline recorded a loss of 80 billion rupees, which is estimated to increase to 112 billion rupees this year. Looking ahead, PIA’s annual deficit is predicted to reach 259 billion rupees by 2030.
Furthermore, the ban on UK-Europe flights has been a significant contributing factor to PIA’s financial struggles, leading to an annual loss of 71 billion rupees.
