Tag: Financial Restructuring

  • PIA set for transformation: Federal cabinet approves privatisation, restructuring

    PIA set for transformation: Federal cabinet approves privatisation, restructuring

    In a significant development, the caretaker federal cabinet has granted approval for the restructuring of Pakistan International Airlines (PIA) and the privatisation of First Women Bank Limited.

    This decision, based on recommendations put forth by the Privatisation Division, aims to address the financial challenges faced by PIA in recent years.

    The pivotal meeting of the federal cabinet, presided over by Caretaker Prime Minister Anwaar ul Haq Kakar, saw the submission of restructuring recommendations by the Privatisation Division.

    It was highlighted during the session that PIA has been grappling with financial losses over an extended period.

    Previous cabinet meetings had already endorsed the appointment of a financial advisor, whose role is integral to the financial and administrative restructuring of PIA.

    The cabinet was briefed on the progress, indicating that the financial advisor has devised a comprehensive financial restructuring plan aligned with international norms.

    Under this plan, PIA is set to undergo a division into two distinct entities: Top-Co and Hold-Co. The core operations of PIA, including engineering, ground handling, cargo, flight kitchen, and training, will be consolidated under Top-Co.

    On the other hand, entities such as Precision Engineering Complex, PIA Investment Limited, properties, and other subsidiaries will find their place within Hold-Co.

    This strategic restructuring aims not only to address the financial challenges faced by PIA but also to attract potential investors.

    The cabinet has been briefed on the measures undertaken to enhance the attractiveness of PIA for investment, laying the groundwork for a positive trajectory in the airline’s future.

  • PIA’s privatisation plan gets nod from Cabinet Committee

    PIA’s privatisation plan gets nod from Cabinet Committee

    In a significant development aimed at reviving the fortunes of Pakistan International Airlines (PIA), the Cabinet Committee on Privatisation (CCoP) has given its unanimous approval for the privatisation of the national carrier. The decision was reached during a recent session of the Cabinet Committee on Privatisation, chaired by Finance Minister Senator Ishaq Dar.

    The meeting deliberated on a proposal presented by the Privatisation Commission, advocating for the inclusion of Pakistan International Airlines Co. Ltd. (PIACL) in the ongoing privatisation programme. After thorough consideration and following a crucial amendment in the parliamentary law, the CCoP decided to formally incorporate Pakistan International Airlines Co. Ltd. (PIA) into the list of active privatisation projects.

    A significant aspect of the meeting’s agenda was the Privatisation Division’s detailed presentation on the progress of the Roosevelt Hotel’s privatisation. The Cabinet Committee on Privatisation engaged in an extensive discussion and subsequently granted its consent to the Privatisation Commission’s plan to appoint a Financial Adviser. This Financial Adviser will play a pivotal role in structuring and facilitating transactions related to the Roosevelt Hotel in New York, an asset owned by PIA Investment Limited (PIA-IL).

    Highlighting the urgent need for corrective action, Aviation Minister Khawaja Saad Rafique had previously issued a stark warning regarding PIA’s financial trajectory. If immediate measures were not undertaken, the airline could potentially incur staggering losses amounting to Rs259 billion by the year 2030. Minister Rafique stressed that the transfer of administrative control to the private sector, along with the injection of Foreign Direct Investment (FDI), was essential to mitigate these looming financial challenges.

    In pursuit of this objective, Minister Rafique tabled “The Pakistan International Airlines Corporation (Conversion) (Amendment) Bill, 2023” before the Senate. The proposed amendment to Section 3 of the bill seeks to redefine the ownership and privileges of the company’s shareholders. Additionally, the bill empowers the Federal Government to issue fresh shares or cancel existing ones, further facilitating the necessary structural changes.

    Despite the bold vision presented by Minister Rafique, the bill encountered resistance within the Senate. While emphasising the potential benefits of FDI and private sector involvement, the bill’s proponents faced opposition from certain Senators. In light of these differing perspectives, the Senate Chairman has referred the matter to the relevant standing committee for further deliberation.

    As Pakistan International Airlines embarks on this transformative journey towards privatisation, the nation awaits the outcome of these critical discussions, cognizant of the substantial implications for both the airline industry and the country’s economic landscape.