Pakistan International Airlines (PIA) has moved one step closer to privatization, with the assistance of accounting firm Ernst & Young, ahead of elections next week.
PIA Will Be Sold Under The Direction Of Ernst & Young
In November 2023, Ernst & Young was tapped help the Pakistani government rebuild and partially private beleaguered flag carrier Pakistan International Airlines (PIA). As a condition for a $3 billion bailout from the International Monterey Fund, Pakistan agreed to sell off the loss-leading carrier.
The original plan was to create a public-private partnership with a foreign airline in which that carrier would take a 40% stake in PIA in exchange for “significant” equity and taking day-to-day control of it. Pakistan’s caretaker administration is now preparing to sell a majority of the airline after elections next week.
Privatisation Minister Fawad Hasan Fawad told Reuters:
“Our job is 98% done. The remaining 2% is just to bring it on an excel sheet after the cabinet approves it.”
And yet it still is not clear what will happen next for PIA. Will it be sold to an airline? To a government? How will the carrier change? PIA has debt of over 2.5 billion USD and is expected to report a loss of 400 million USD for 2023.
We do know that Pakistan plans to move PIA’s debt into a separate entity and will now sell a 51% stake including full management control.
Despite being blacklisted in the European Union and United Kingdom, PIA has leased many of its valuable slots to Turkish and Kuwaiti airlines and retains access to London Heathrow and other key destinations. PIA’s turnaround plans hinges on regaining access to these blocked markets.
As part of the deal, the two hotels PIA owns, including the infamous Roosevelt Hotel in Manhattan, will not be sold.
Will PIA Go The Air India Route?
All of this is under the direction of analysts from Ernst & Young, which are being handsomely paid to manage this transition. From the consumer side, PIA is still running the same aircraft with the same broken cabins they were a decade ago when I flew on them. Crew notoriously “disappear” in Toronto (the carrier flies to Canada once per week) and the carrier is really a basket case right now…
But could the airline turn around as Air India has done? Could private investors revitalize the carrier and make it profitable again? That is certainly the hope. Frankly, I don’t see any clear buyers emerging from outside Pakistan, even as the law as been amended to allow a foreign entity to hold a majority share of the airline, but Pakistan has a population of over 230 million people and there should be great potential in running an efficient and corruption-free carrier.
For now, we should see more details about the sale of the carrier following the February 8, 2024 election.
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image: PIA
No; much like the laughable Saudi “NEOM” project, for which McKinsey and BCG have raked in an estimated $1.8 billion, I predict that EY is likely to tell PIA whatever they want to hear and then laugh their way to the bank.
PIA flies to Canada more than once a week. Last summer, they were flying to Toronto (YYZ) 5x weekly. They are divided with flights from Islamabad (ISB), Lahore (LHE), and Karachi (KHI), with two of these routes being 2x weekly each and one being once a week. They may have cut some flights for the winter season, but definetly not to once a week. I assume its likely 4x or 3x weekly total flights to Toronto,
Toronto goes great for PIA, given the large Pakistani community and limited frequencies of Emirates and Qatar Airways. Their load factors for YYZ flights are between 80-90% (I believe I last read they were 87%, but I could be wrong).
EY is only an accounting firm . They are good at juggling figures . What is needed is operational good management and someone who understands aviation .
Let me buy the airline and get them on track in a decade time. Seriously, Pakistan and their valuable assets should be handed over to young educated generation , who can transform them into today’s age requirement of the world. Smooth transition is required where the good experience is shared and mistakes are avoided from past.
I will not take salary but rebuilt the airline to fly the world again
Bassim from Dubai