By Staff Reporter
ISLAMABAD: The Privatization Commission (PC) said on Friday that it had approved the appointment of a British consortium led by Ernst & Young as the financial adviser for the privatization of the loss-making Pakistan International Airlines (PIA) by the end of January 2024.
The commission said that the consortium was chosen from among eight interested parties that had submitted their proposals for the job, and a negotiating committee had been formed to finalize the terms of the contract with the successful bidder.
“The Privatization Board meeting … approved the appointment of the financial adviser for the privatization of the PIA Corporation. A consortium led by Ernst & Young was declared the successful bidder,” the PC said in a statement.
“Three top listed 20 financial FA firms responded to the request for a proposal to prepare plans for privatization and bifurcation of the PIA into core and non-core entities. Based on the laid down criteria, the evaluation committee formed by the board declared the Consortium led by Earnest & Young as the Top-ranked Interested Part.”
The government hopes to complete the privatization of PIA by the end of January 2024, as part of its commitments to the International Monetary Fund, which agreed to lend Pakistan $3 billion in July last to help it overcome a balance-of-payments crisis.
PIA, once a source of national pride and a symbol of the country’s aviation prowess, has been struggling to stay afloat amid mounting debts, operational inefficiencies, and poor customer service.
The airline has received frequent financial bailouts from the government in the past, but the current interim administration refused to rescue it in August without a viable business plan.
Last month, the government finally approved Rs8 billion in financial support for the airline, which helped it resume its normal flight operations after a fuel supply crisis that forced it to cancel hundreds of domestic and international flights.
The airline has accumulated losses of more than Rs400 billion and has been dependent on government bailouts to keep flying.
The privatization of PIA is expected to face resistance from its employees and unions, who have staged protests and strikes in the past against any such move. The airline has about 14,000 employees, or more than 250 per aircraft, compared with the global average of about 130.
The government also informed the Senate, the upper house of parliament, on Friday that the plan to privatize PIA was still on the table, along with outsourcing its airport operations in line with an agreement with the IMF.
The government has also hired the International Finance Corporation, a subsidiary of the World Bank Group, as the transaction adviser for outsourcing the operations of major airports in the country, the aviation ministry said in a written reply to a question in the Senate. “The IFC will conduct a feasibility study and recommend the best possible option for the public-private partnership of the airports.”
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