AFTER trying numerous ‘revival plans’ to turn around the lossmaking national carrier, Pakistani policymakers appear to have realised the folly of repeating the same mistake over and over again. They have eventually admitted that it is impossible to relive what many fondly remember as the ‘lost glory’ of PIA. Those happy days are long past; the airline is now moribund — both as a business and brand. The company’s liabilities and debt of Rs742bn far exceed its assets of Rs110bn. Its flight operations are shrinking, and it cannot fly to many international destinations owing to serious safety concerns. Even on domestic routes, it is facing stiff competition from younger private airlines. Every plan to restructure the company has met with strong resistance from its employees, as well as elements responsible for squeezing blood from it. Following a decision by the Cabinet Committee of Privatisation and an amendment to the PIAC law by parliament, the PDM coalition had recently included PIA in the long list of active privatisation projects. The previous law passed by the PML-N set-up in 2016 had prohibited the government from selling its majority shareholding in the airline to private investors or outsourcing its management. PIA’s privatisation plan was unveiled after Islamabad agreed to a strict fiscal discipline plan with the IMF last month to secure a short-term $3bn bailout deal to avert sovereign default. But the question is: will the government find a buyer for a brand that has lost all its prestige and demand? Conversely, would an investor put money in a virtually dead concern plagued by political and financial problems?
Recent reports suggest that the authorities do realise the potential difficulties in the way of PIA’s sale, and, hence, have drawn up a fallback plan to first restructure it and then hand over its management to private investors. Under this plan, the authorities intend to transfer the airline’s liabilities to a new holding company before outsourcing management. Indeed, with PIA’s accumulated losses projected to rise to Rs850bn by the end of this year, it is imperative to divest it of its liabilities before reaching out to investors for its sale or partnership in management.
Meanwhile, like previous strategies formulated for the airline’s revival, the new plan is expected to meet stiff resistance from employees as well as the forces of status quo who want to preserve their financial interests. While the government can allay the fears of the staff by creating a pool of surplus employees or offering them generous compensation if they are to be laid off, it will require strong political will to overcome the resistance of vested official interests. Regrettably, concerns remain that the new strategy will also collapse like the previous plans since it is not very different from them.
Published in Dawn, August 14th, 2023
