Pakistan International Airlines (PIA) privatization was further discussed on Thursday with three available options for financial restructuring of the organization and segregation of its core and non-core assets and liabilities.
The Privatization Commission’s Transaction Steering Committee discussed the matter in a meeting chaired by Minister for Privatization Daniyal Aziz, the meeting proposed an implementation plan of segregation for PIA.
Several stakeholders attended the meeting including senior PIA officials, officials from Civil Aviation Authority (CAA), Ministry of Finance, Aviation Division and Securities and Exchange Commission of Pakistan (SECP).
The meeting ensured that restructuring plan would be done according to PIA conversion Act, 2016, it was discussed that outstanding liabilities, including the intrinsic value of underlying assets and operating cash flow, it was planned to get rid of legacy liabilities of PIA in order to improve the current financial situation of the firm and enable future investment.
It was also proposed to peel off non-essential assets and liabilities to a government entity in order to limit the interest of potential strategic investor to the ownership and management of core aviation function of the organization.
It was agreed during the meeting that non-essential real estate assets including Hotel Scribe in Paris, Roosevelt Hotel in New York, foreign and domestic properties as well as precision Engineering Complex would be retained by the state.
The organization’s airline business will maintain positive balance sheet after transferring legacy liabilities from PIACL, this will further improve the operational and structural efficiency of the organization.
According to the group of financial advisors, transactions should be undertaken in two phases—developing restructuring and divestment strategy, then facilitating private sector partnership in core operations of PIACL. According to the Minister, only minority shares would be offered to the third parties according to the unanimous law passed in the parliament, whereas the management control will stay in government hands.
However, there would not be any impact on PIA employees already working in the organization whatsoever, he explained. The board of directors of PC, Cabinet Committee on Privatization and the Federal Cabinet have approved and upheld the plans for PIA transaction.