Is PIA’s restructuring a gimmick used to kick-start privatization?


News Desk |

The much-awaited restructuring process of Pakistan International Airlines (PIA) has been initiated prior to the privatization of the National carrier, according to the adviser to Prime Minister on Aviation, Sardar Mehtab Abbasi.

PIA senior management kick-started the ‘business transformation journey’ of the airline during a ceremony held to mark the occasion.

President and Chief Executive Officer (CEO) Dr. Musharaf Rasool Cyan also graced the occasion along with Sardar Mehtab Abbasi.

Read more: Government sets in motion PIA privatization process

Abbasi expressed utmost satisfaction with the plan devised [which has already been shared with the government] and told the reporters that “restructuring process of PIA is leading it towards growth which is encouraging and gave us trust to avert the plight of the ailing carrier.” 

He said the loss-making airline is showing growth which is witnessed through the numbers generated in January and it was made possible due to efforts of the management and other staff members which led to hike in the number of travelers.

Abbasi confidently claimed that PIA will overcome its losses by 2020 and will become a profitable airline.

Islamabad International Airport which is yet to be operational will start functioning by the end of April.

– Abbasi

Answering the questions from reporters Abbasi said, “management is not looking to sack the current employees despite being overburdened with a huge number of employees.”  He said arrangements have already been made to train the staff to improve the service.

He said that new Islamabad International Airport which is yet to be operational will start functioning by the end of April.

He also welcomed the newly hired cabin crew members and expressed a desire to improve the capabilities of the engineering division of the airline as stated in its five-year plan which annually generates more than Rs1 billion by providing ‘A’ check to the aircrafts of other airlines.

Daniyal Aziz ‘s contradicting the stance

Abbasi had informed the Senate on January 23 that there was no plan in place to privatize PIA as for now and the management was working hard to restructure it to regain the past glory for the national carrier.

It was not possible to privatize the airline in only few months prior to the 2018 general elections and the process will take 3 to 5 years.

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The statements given by Abbasi are in contraction with the statements of federal privatization minister Daniyal Aziz where he claimed that under the PIAC Conversion Act 2016, it is allowed to initiate the process given that the Act was adopted unanimously by the parliament and the incumbent government was supposed to complete the privatization process by April 15 this year.

Abbasi on contrary had ruled out any possibility of its completion in current tenure of the government.

Did PM Abbasi approve privatization?

Prime Minister (PM) Shahid Khaqan Abbasi had met the Cabinet Committee on Privatization (CCoP) in February and gave clearance to initiate the process of restructuring PIA. Yesterday, federal cabinet again met and gave the go-ahead to privatization process which is to be started immediately but is termed as restructuring as a gimmick to avoid a political uproar. 

The government appears to be giving confusing signals to avoid political backlash and controversy.

Government is hoping to complete the privatization process before the end of its tenure in June.

Read more: New PIA chief’s optimism leaves people confused

According to the restructuring plan which is, in fact, a privatization plan, the government is expected to sell its core businesses comprising of flight operations and management and the remaining businesses will remain under the government control.

Despite the long delays and protests, the government was successful in passing the bill facilitating the conversion of PIA into PIACL.

According to the PIAC Act 2016, the government will not hold less than 51 % stake in the national carrier and the management of the entity and its subsidiary companies will remain under a government which will be the majority shareholder in the organization.

PIA looking to go green

PIA suffered losses for a prolonged period of time. In all fields including operations, finance, planning, engineering, and passenger services, it showed below-par results.

The airline has been losing billions of rupees per month and is increasingly facing a daunting competition from foreign competitors. Under tough competition from cash-rich foreign competitors like (Emirates Airways, Etihad Airways, Turkish Airline, Qatar Airways and Singapore Airline), PIA has to overhaul its systems to gather momentum to revert its fortunes.

The only area where it showed consistency is a decline in profitability, bailouts and huge debt pile which put the treasury under pressure along with other loss-making public entities.

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Some of the fundamental reason for under-performance included nepotism, poor service quality, widespread corruption and failure to build long-term strategic initiatives. It is expected that by selling its stake, the government will be able to revamp PIA by eliminating the corruption and significantly overcoming its poor service quality.

Opposition parties, in particular, PPP has opposed the non- transparent PIA privatization plan at every forum and remained skeptical of PML-N antics over privatization and termed it a controversial mechanism devised to benefit few. Can government complete such a controversial and apparently lengthy process in this short period of time remains to be seen.


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