Pakistan selling largest airline under IMF pressure; Munir firm bids
What's the story
Pakistan is moving ahead with the privatization of its national airline, Pakistan International Airlines (PIA), under pressure from the International Monetary Fund (IMF) to rein in spending and reform its collapsing economy. Prime Minister Shehbaz Sharif announced that bidding for PIA will be held on December 23. This comes after Pakistan's failed attempt to offload a 60% stake in debt-ridden airline PIA, which received only one offer, much below the asking price.
Bidding details
Fauji Fertiliser Company among pre-qualified bidders
The government has shortlisted four entities: Lucky Cement Consortium, Arif Habib Corporation Consortium, Fauji Fertilizer Company Limited (FFC), and Air Blue Limited. FFC is part of the military-controlled Fauji Foundation. Army Chief Field Marshal Asim Munir wields considerable influence over the foundation through strategic appointments. Per Reuters, privatizing PIA and other state-owned firms is critical for raising funds and reforming these agencies under the ongoing $7 billion IMF bailout program, which was set up to address an economic crisis.
Airline crisis
PIA's financial troubles and pilot scandal
Privatization Minister Muhammad Ali said Pakistan hopes to raise PKR 86 billion from privatizations this year. PIA has been mired in financial troubles for years, with losses exceeding PKR 200 billion. The airline's crisis deepened in 2020 when it was revealed that over 30% of Pakistani pilots had fake licenses. This led to the grounding of 262 pilots and international bans on PIA flights by the European Union Aviation Safety Agency (EASA), the United Kingdom, and the United States.
Internal issues
PIA's operational inefficiencies and corruption
The airline's problems were compounded by chronic overstaffing, political appointments, and corruption. The problem was exacerbated by the 2020 crash of PIA Flight 8303, which not only killed 97 people but also triggered costly safety audits, groundings, and emergency repairs. Pakistan is also in talks with China to upgrade and reconstruct its railway network and develop the Gwadar port under China's $65 billion investment in Pakistan, part of Beijing's Belt and Road Initiative.