The board of Pakistan's Privatisation Commission (PC) has approved the sale of 51% of PIA - Pakistan International Airlines (PK, Islamabad International). The January 10, 2024, PC board meeting also approved a recommendation to split PIA's debts and assets into separate corporate entities.

The meeting, chaired by Privatisation Minister Fawad Hasan Fawad, was acting on a series of recommendations provided by a consortium, led by Ernst & Young, advising on the financial aspects of the planned sale, which included the sale of a majority stake (and management control) in the state-owned airline, along with the scrubbing of three-quarters of PIA's PKR825 billion rupees (USD2.9 billion) in liabilities from its balance sheet.

Pakistan's Civil Aviation Authority Act does not allow a foreign entity to take majority control of a local airline. However, a foreign buyer can partner with a local partner entity to circumvent this rule. The Qatari government is among the foreign entities the Pakistani government has recently spoken to about buying the PIA stake.

The proposal to rid PIA's balance sheet of most of its cumulative debts has been floated previously and are a combination of monies owed to the government, banks, lessors, fuel companies, and other creditors and suppliers. However, around PKR280 billion (USD995 million) of the total is owed to domestic financial institutions, and it remains a point of contention how these loans will be treated and whether the current loan terms and interest rates will continue.

Separately, the consortium is yet to arrive at a final valuation of PIA's assets. However, it is believed the total liabilities exceed total assets at least fivefold, giving a rough potential asset valuation of circa PKR165 billion (USD586 million). Assets include aircraft, MRO infrastructure, and routes. There is a mid-January deadline for completing the asset valuation.

Spearheading PIA sale plans are Pakistan's caretaker government and PIA's senior management. Coinciding with the board meeting this week, Prime Minister Anwaarul Haq Kakar spoke out in support of the privatisation plans and the need to achieve it in a timely manner. The government has also ratified legislation to smooth out the process.

The recommendations of the PC board now need to go before the Cabinet Committee on Privatisation. Handily, that committee is also chaired by Fawad Hasan Fawad. Assuming the recommendations are approved there, they will go to the caretaker cabinet committee for final approval.

Meanwhile, PIA's official social media accounts and local outlets are spruiking the induction of an A320-200, AP-BLZ (msn 2944), into the fleet. The plane is one of the two PIA jets stranded at Jakarta Soekarno-Hatta that were at the centre of a lease dispute with AirAsia Aviation Group. Recently, PIA settled with the lessor, buying the planes, and ferried AP-BLZ back to Pakistan for re-introduction into the fleet. After a series of test flights and recertification by Pakistan's Civil Aviation Authority, ADS-B data indicates the plane resumed revenue operations on January 10. The second aircraft, AP-BLY (msn 2926), remains in Jakarta. However, a PIA spokesperson has told ch-aviation that it is ready to fly out from Indonesia pending the settlement of some import-related formalities and should be on the move shortly.