Government of Pakistan to split and sell PIA

PIA going down

In a drive to sell national assets to payback IMF loans, PML-N led government of Pakistan is eager to sell Pakistan International Airlines (PIA), the flagship national carrier, to a joint consortium of Emirates Airlines, Etihad Airways and Qatar Airways.

Mohammad Zubair UmarAccording to Reuters, Pakistan Minister of State for Privatization Mohammad Zubair (who is brother of PTI leader Asad Umar) stated in an interview during his visit to India that government of Pakistan plans to split PIA into two companies and then sell control of core business to a global airline over the next 18 months.

Mohammad Zubair, dubbed by Reuters as Pakistan’s privatisation czar, said that no decision had been taken on the buyer, but he mentioned Emirates Airline, Etihad and Qatar Airways – the Gulf giants that dominate the regional sector – as possibilities.

PIA has some 17,000 employees but just 36 aircraft – and 10 of them are grounded due to a lack of spare parts.

Under his plan, the airline will be spun off as a separate entity and PIA’s other interests – such as ground-handling, catering, hotels and even a poultry business – would go into a holding company that would be retained by the state.

To avoid mass layoffs that would run into political opposition the holding company would absorb all the employees, keep a share in the airline to earn dividend income and then sell off each of its interests individually over time.

Previously, Pakistan government announced that it will seek to raise about $815 million through a sale of 7.5% shares in Oil & Gas Development Company, its largest offering in eight years.

Next on the block will be the government’s 40 percent stake in Habib Bank Ltd, which will be sold in two stages between November and next March, for around $1.2 billion.

Also ahead is the sale, targeted at domestic investors, of the state’s 7.5 percent stake in Allied Bank Ltd for around $150 million.

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