ISLAMABAD – The federal cabinet has given the green light to a comprehensive restructuring plan for Pakistan International Airlines (PIA) following a recommendation from the Privatisation Division.
The decision comes amid mounting losses incurred by PIA over the past years, prompting the need for a strategic overhaul.
During the cabinet session, it was highlighted that previous meetings had sanctioned the appointment of a financial advisor to spearhead the restructuring of PIA’s finances and management. Under the guidance of this advisor, an organizational restructuring blueprint has been devised, drawing insights from international best practices.
According to the proposed plan, PIA will undergo a division into two distinct entities named TopCo and HoldCo. TopCo will encompass PIA’s core operations, including engineering, ground handling, cargo, flight kitchen, and training facilities.
Meanwhile, HoldCo will manage subsidiary organizations and assets besides the Precision Engineering Complex and PIA Investment Limited.
Stakeholders were briefed on how these restructuring measures aim to attract investors to PIA and pave the way for sustainable growth.
Additionally, the federal cabinet has directed the Cabinet Committee on privatization to expedite the resolution of outstanding liabilities owed to PIA by government-owned entities, further bolstering the airline’s financial stability and prospects for revitalization.
Earlier, the International Monetary Fund (IMF) endorsed the government’s privatization initiative for Pakistan International Airlines (PIA). The decision comes after successful negotiations between officials from the Ministry of Privatization, the Ministry of Finance, and the IMF.
Under the terms of the agreement, the IMF has committed to covering the interest payments on PIA’s loans to the government of Pakistan for a duration of one year. This strategic move is aimed at easing the financial strain on banks, which currently shoulder a hefty burden of approximately Rs 280 billion in PIA loans, with a 12 percent interest rate attached.
Notably, the IMF has emphasized the importance of not extending banks’ responsibility for interest payments on PIA loans beyond one year.
Aside from resolving the immediate debt repayment issue, the agreement also delineated a timeline for the privatization of PIA within one year.
Another roadblock is a directive by the Election Commission of Pakistan which has halted the privatization of the carrier and has sought all relevant documents regarding the move.