The planned privatization of Pakistan International Airlines (PIA), the state-owned carrier, has made significant progress with recent approvals from the Securities and Exchange Commission of Pakistan. On May 6, the commission approved a scheme of arrangement between Pakistan International Airlines Corporation Limited and PIA Holding Company Limited, setting the stage for the legal separation of PIA’s core aviation operations from its non-core activities.
This pivotal approval enables PIA Holding Company to acquire 100% ownership in PIA and to issue and allot shares to the qualifying shareholders of PIA. This development follows closely on the heels of the Competition Commission of Pakistan’s approval of the same arrangement just two days earlier.
These regulatory approvals are crucial steps in the complex process of selling a majority stake in the airline, which includes navigating a multitude of bureaucratic and regulatory hurdles. The creation of PIA Holding Company is central to this strategy, facilitating the transfer of USD 2.26 billion in non-core liabilities from PIA’s balance sheet to the holding company. This move is designed to make PIA more appealing to potential buyers by streamlining its financials.
The government is actively seeking to sell between 51% and 100% of PIA’s share capital and transfer management control of the airline, which has been struggling with losses. As part of the restructuring, shares in Pakistan International Airlines Corporation Limited will be exchanged for shares in PIA Holding Company Limited, with the latter assuming full ownership. The holding company will also take on approximately USD 89.3 million in non-core assets, while remaining entirely under government ownership.
PIA itself will retain around USD 526 million in core assets and USD 726 million in core liabilities. According to Pakistan’s Finance Minister Muhammad Aurangzeb, speaking at an investment conference in Saudi Arabia, the government aims to finalize the privatization by early July. The deadline for initial expressions of interest has been extended until mid-May, with indications of some investor interest, particularly from local companies, although the government is hopeful for foreign investors with aviation experience and financial resources to step in.
This strategic privatization effort represents a significant shift in Pakistan’s approach to managing its national carrier, emphasizing efficiency and financial health in preparation for a new phase of private ownership.
