In a significant move towards privatization, shareholders of Pakistan International Airlines (PIA) have approved the transfer of non-core assets and liabilities to a newly formed holding company. This decision, ratified during an extraordinary general meeting in Karachi on April 20, aligns with PIA’s strategy to streamline operations by segregating its core and non-core business segments.
According to a Pakistan Stock Exchange filing dated April 22, the resolution allows for the bifurcation of PIA’s operations into two distinct entities: the core and the non-core undertakings. The non-core assets, valued at PKR24.87 billion (approximately USD89.3 million), will be managed by the PIA Holding Company, leaving PIA with core assets worth PKR146.6 billion (USD526 million).
This restructuring is designed to enhance the financial health of the airline by transferring substantial liabilities, including long-term financing and employee-related debts, to PIA Holding Company. These liabilities, totaling PKR628.5 billion (USD2.26 billion), will ultimately be shouldered by the Pakistani government and taxpayers.
The privatization effort comes at a crucial time as PIA seeks to recover from significant operational challenges, including a European Air Safety Agency (EASA) ban following a fatal crash and a scandal involving fraudulent pilot licenses in 2020. Management is hopeful for a positive outcome from the upcoming EASA meeting in May, which could potentially lift the ban and allow PIA to resume flights to European Union airports, starting with Paris Charles de Gaulle.
The EU flight ban has had a severe financial impact on PIA, with estimated losses amounting to PKR120 billion (USD431 million) in revenue. The airline’s ability to restart operations in Europe is seen as a key component of its recovery strategy and long-term viability.
This strategic reorganization through asset and liability restructuring is a pivotal step for PIA as it prepares for its next phase of operations and seeks to attract investment under its privatization plan.
