AT long last, the authorities were able to get rid of one of the pride assets of the country — the national flag carrier, the PIA when a consortium led by business tycoon Arif Habib bought 75% of its share in an open bidding on Tuesday. On the face of it, the consortium placed the highest bid of Rs 135 billion in the 13th round of the open auction but practically the national kitty will get just Rs 10 billion whereas the remaining amount will be invested back into the airline. Together with the fact that pension and medical facilities for the employees of the PIA will remain a liability of the Government (besides a debt of Rs 670 billion that will be paid by the taxpayer), the deal, in no way, is a happy end to the privatization move.
There is no doubt that it was the first major privatization transaction in two decades after the government sold the K-Electric in 2005 and it is hailed as a success by all sides but one wishes it does not face problems and challenges that the KE is still facing in stark contrast to expectations that the privatization will improve the fate of the company and facilitate its consumers. In a statement on ‘X’, Prime Minister Shehbaz Sharif termed it “a historic day for Pakistan”, adding “it was our firm commitment to the people of Pakistan that speedy and concrete steps would be taken to privatise loss-making state-owned enterprises that have been a burden on the economy”. What the PM said was the original concept of the privatization — to sell loss-incurring public sector enterprises — and in this backdrop the privatization means there will be no piling up of the loss for the government. PIA’s decline was a classic example of mismanagement as the institution could not take advantage of the opportunities it had and no worthwhile effort was made to reform the national institution. However, some analysts describe the ultimate privatization as a turning point as it sends a powerful signal to investors that the government is serious about shrinking its commercial footprint and tackling inefficiencies that have drained public resources for years. One of the healthy aspects of the transaction is that it has been handed over to a consortium of Pakistani entities led by seasoned and experienced businessmen and hopefully their wisdom will help restore the lost glory of the airlines. This is also evident from the remarks made by leader of the willing consortium Arif Habib who said PIA currently has 14 operational aircraft and that expanding the fleet would be a top priority. He said the number of planes would be increased to 38 in the first phase and to 65 in the second phase of the turnaround plan. Privatization is resented by existing employees and understandably so because of uncertainty about their jobs.
In this backdrop, it is encouraging that the government has bound the new owners not to dismiss any employee at least for one year. Arif Habib himself has described PIA’s workforce as highly capable, adding employees would be offered attractive jobs under the new ownership. According to all estimates, the aircraft to employees ratio is one of the highest in the world in the case of PIA and it is a foregone conclusion that the strength will have to be rationalized and redundancies created by hiring on considerations other than merit need to be jettisoned. As acknowledged by Arif Habib, PIA has capable and experienced manpower, it has privileged access to many busiest world airports, including Heathrow, London besides 170 pair slots in various global destinations, including to the Gulf countries, North American and Europe. Hopefully, this potential and commitment of the new owners will help improve both its financial health and quality of service.
