Even as the government moves swiftly to privatise debt ridden Air India, Pakistan’s privatisation minister Daniyal Aziz said yesterday said the country will try to privatise its national airline before general elections due this year.
Even as the government moves swiftly to privatise debt ridden Air India, Pakistan’s privatisation minister Daniyal Aziz said yesterday said the country will try to privatise its national airline before general elections due this year. Pakistan’s International Airline is losing money and market share to Gulf-based rivals such as Etihad and Emirates. Further, the airline has been hit by management turmoil in recent years and a 2016 plane crash that led to 47 deaths, according to Reuters report.
PIA was among 68 state-owned companies earmaked for privatisation in return for a $6.7 billion International Monetary Fund package that helped Pakistan to stave off a default in 2013, Reuters reported. Interestingly, Pakistan’s general elections are due in July this year. The privatisation of loss-making entities that were draining the exchequer was a key priority for the Pakistan Muslim League-Nawaz (PML-N) party when it swept to power in 2013.
Meanwhile, Minister of State for Civil Aviation Jayant Sinha said last week that the government will look to close Air India’s disinvestment by the end of calendar year 2018.
Earlier this week, a parliamentary panel on transport, tourism and culture recommended that the national carrier Air Indian should be given at least five years to revive and write-off its debt. The Parliamentary Standing Committee on Transport, Tourism and Culture concluded that the government should review its decision to privatise or disinvest Air India and explore the possibility of “an alternative to disinvestment of our national carrier which is our national pride.”
The draft report said, “Air India should be given a chance for at least five years to revive themselves”. The tenure of five years indicates the end of the turnaround plan and FRP period in 2022. It said the airline’s debt was “due to policy directions of the ministry of civil aviation.”
While Air India’s debt stands at a staggering Rs 52,000 crore as of September-17, Pakistan International Airlines’ debt stands at $1.8 billion, or around Rs 11,520 crore. The impetus to sell PIA has grown as the airline has piled up huge losses estimated by its former chief executive in March at about $30mn a month.
When asked how soon a buyer could acquire PIA, Aziz reportedly told Reuters, “Tomorrow morning. If you have the money, come and buy it.” The minister did not give any indication of the expected valuation.