ISLAMABAD: The Privatisation Commission’s Transaction Steering Committee on Thursday discussed three models for the financial restructuring and segregation of core and non-core assets and liabilities of Pakistan International Airlines (PIA).
The meeting, chaired by Minister for Privatisation Daniyal Aziz, proposed the implementation of segregation for the national carrier.
The meeting was attended by the officials of PIA, Aviation Division, Civil Aviation Authority, Ministry of Finance, and Securities and Exchange Commission of Pakistan (SECP).
It was agreed that the proposal to restructure PIA will be finalised after due process in accordance with the PIA Conversion Act 2016.
Given the quantum of outstanding liabilities, including the intrinsic value of underlying assets and operating cash flow of the business, it was proposed to carve out legacy liabilities from PIA to improve the financial situation of the core business and enable future investment.
In order to limit the interest of potential strategic investor to the ownership and management of core aviation function, it was proposed to carve out non-essential assets and liabilities to a government entity.
It has been agreed that non-essential real estate assets including Roosevelt Hotel in New York (USA), Hotel Scribe in Paris (France), domestic and foreign properties, and Precision Engineering Complex would be retained by the state.
The airline business would attain positive balance sheet after transfer of legacy liabilities from PIACL which will further enhance its operational and structural outlook, the meeting was informed.
The consortium of financial advisers suggested undertaking the transaction in two phases – formulation of restructuring and divestment strategy, and later facilitating private sector partnership in the core operations of PIACL.
Addressing the meeting, Mr Aziz reiterated that only minority shares of the airline were being offered to a third party as per unanimously passed law by all parties in the Parliament, while the management control will remain with the government in accordance with the law.
There was no impact on employees whatsoever and they will continue to perform their duties as they are performing now, he explained.
The board of directors of PC, Cabinet Committee on Privatisation and the federal cabinet have passed and ratified the plans for PIA transaction.
Published in Dawn, March 9th, 2018