ISLAMABAD: A major development has been made in the privatisation process of Pakistan’s national carrier, Pakistan International Airlines (PIA), where the government of Pakistan has officially handed over the management control of the company to private investors. With this move, the privatisation phase that began last year has reached its first major milestone.
According to a statement issued by the Privatisation Commission, the first financial phase has been completed under the Share Purchase and Subscription Agreement (SPSA) after all legal, financial and administrative conditions have been fulfilled. As a result, the management authority of the national carrier has now been transferred to an investor consortium led by Arif Habib Corporation.
Along with the transfer of management control, the new management has also completed the formation of the board of directors of the company. Lieutenant General (retd) Anwar Ali Haider has been appointed as the first chairman of PIA after privatisation, while the new management has expressed its commitment to revive the company, build it on modern lines and provide services in line with international standards.
According to the Privatisation Commission, the agreement required the fulfilment of about 40 different conditions, including domestic and foreign regulatory approvals, corporate affairs, tax reforms, changes in aviation policy, aircraft lease agreements, financial arrangements, aviation laws and approvals from various commercial entities.
According to officials, due to PIA’s international flights, it was also necessary to obtain approvals from relevant authorities in several countries, including Saudi Arabia and Kuwait, so that air operations could continue uninterrupted despite the change in ownership.
During this time, the company also obtained the necessary approvals from aircraft leasing companies, fuel suppliers, maintenance companies, payment system operators and other business partners so that existing agreements would not be affected after privatisation.
In the privatisation process, necessary amendments to the company’s constitution, shareholder approval, increase in share capital and corporate approvals related to the Securities and Exchange Commission of Pakistan were also completed.
The government also took special steps to protect the interests of employees. The notification regarding essential services was extended so that air operations are not affected, while various safeguards were also implemented to ensure continuity of employees’ jobs and industrial harmony.
The total investment volume under the privatisation agreement has been set at Rs 180 billion, of which Rs 55 billion will be paid to the government as part of the sale of the company’s shares, while Rs 125 billion will be directly added to PIA as fresh investment to improve the financial condition of the company.
Under the first financial phase, the investor group has paid Rs 10 billion to the government, while Rs 80 billion has been added to the company as fresh capital. The aim of this investment is to purchase new aircraft, modernise the existing fleet, expand international routes, improve operational efficiency and provide better facilities to passengers.
According to the agreement, the second financial phase will be completed within the next twelve months, during which another Rs 45 billion will be invested in the company. The investor consortium has also expressed interest in buying the remaining 25 per cent stake held by the government in the future, which is estimated to be worth about Rs45 billion.
The prime minister’s adviser on privatisation, Muhammad Ali, termed the development a major economic milestone for Pakistan, saying that the deal has been completed in a transparent, competitive and professional manner, which will further strengthen the confidence of domestic and foreign investors.
A statement issued by the consortium said that the new management will implement a long-term plan to make the national airline a modern, profitable and world-class airline. The company’s focus will be on fleet expansion, passenger convenience, punctuality, modern technology and increasing competitiveness in the global market.
Experts say that if all investment commitments are completed within the stipulated period, PIA can not only overcome its financial difficulties but also re-establish itself as a strong airline in the region. However, this success will depend on the new administration’s strategy, transparent governance, and business decisions.
