Islamabad: The privatisation of Pakistan International Airlines (PIA), presented by the Pakistan government as a reform measure to address long-standing financial losses, has come under scrutiny following criticism in a Colombo-based publication.

According to an article in the Asian News Post, the government transferred approximately Rs 650 billion of PIA’s historical liabilities to a holding company, thereby insulating the private buyer from accumulated losses. A restructured operating entity was subsequently sold to a private consortium led by Arif Habib Corporation at a headline valuation of about Rs 135 billion.

The report noted that only around Rs 10 billion of this amount represents actual cash inflow to the state, while the remaining sum is being injected as equity into the airline itself. It argued that, compared to the retained debt burden of Rs 650 billion, the one-time cash component is relatively small, leaving the public sector with a significantly negative net financial position.

The article contended that public funds have absorbed past losses and recapitalised the airline, while the buyer acquires a de-leveraged asset with potential for future profitability if operational improvements are achieved. It described the transaction as a transfer of burdens and benefits, stating that liabilities remain socialised while potential gains shift to private hands.

The report further observed that over several decades, taxpayer funding supported the development of PIA’s fleet, international routes and landing rights at major global hubs. Critics cited in the article claimed that these assets may have been transferred at valuations below replacement cost when adjusted for brand value, regulatory privileges and network effects in the aviation sector.

The article concluded that the privatisation, in its current structure, leaves the public responsible for servicing the substantial debt accumulated through years of political interference and mismanagement, while receiving limited cash proceeds and a minority equity stake in return.

The Pakistan government has maintained that the privatisation is aimed at restructuring and reviving the loss-making national carrier.
(With IANS inputs)