PIA chairman says government is going to privatise the airline; PIA unions’ representatives invited for talks; PIA’s annual losses reach Rs 300; Government refuses another bailout package;
Pakistan International Airlines Corporation (PIAC) has now been converted in to a public limited company as Pakistan International Airlines Company Limited (PIACL) with immediate effect, says its chairman Naseer N Jaffery.
“The decision has been taken by the federal government through an ordinance under the companies Act 1984 to convert the national flag carrier PIA into a public limited company, which will now be registered with the Securities and Exchange Commission of Pakistan (SECP),” the PIA chief said in a crowded press conference on Sunday.
According to him, “PIACL has succeeded to all the assets, liabilities, duties and obligations of PIAC. Similarly, PIACL is now entitled to the benefit of all notifications, licences, permissions, sanctions, authorisations, concessions, decrees, international air service authorizations, agreements, orders and benefits issued or granted in favor of PIAC.”
“All stakeholders, employees of every grade and category of PIAC are hereby assured that they stand transferred under the ordinance to PIACL with the same designation and on the same terms and conditions as they held in PIAC,” he said and added that all lenders, foreign and local, fleet and non-fleet, and other creditors of PIAC will continue to enjoy the same contractual benefits and protections that they enjoyed from PIAC.
President Mamnoon Hussain promulgated the ordinance to covert the PIA into a company, paving the way for the sale of its 26 per cent shares to a strategic partner under an ambitious privatisation plan.
“We have called the representative of all the unions of PIA and will try to remove all misunderstandings regarding this decision of the government,” the chairman said.
He said that the government still owned 100 per cent shares of PIA of which only 12 per cent were registered with the Karachi Stock Markets and that with this decision, the ownership of the government will not change.
He said the government wanted to privatise the airline, but that the decision would be taken through the Privatisation Commission. In this connection, he said the government is still looking for its strategic partner.
He said that his job was only to reduce the losses of the airline which still stood at Rs 300 billion per year and the government had turned down his request for bailout package. He had requested the government to give Rs 350 billion bailout package for the airline.
In a bid to fulfill IMF conditions under the $6.62 billion Extended Fund Facility (EFF), the government is committed to going ahead with the privatisation of PIA by selling its shares along with management control to a potential buyer within the ongoing financial year ending on June 30, 2016.
Sources in the airline say the decision of the federal government will help the government to transfer its share to any strategic partners at any time.
The PIA Act 1956 has been repealed with immediate effect through the presidential ordinance. The ordinance will lapse in 120 days so the government will have to present this piece of legislation before parliament.
The officials said the federal government had removed the hurdles in the way of giving management control to any party, but the problem was that the decision had been taken through the presidential ordinance not through an act of the parliament. The next session of the parliament will start from today, but the government chose to issue the order a day before the start of the parliamentary session.
Although the IMF did not seem satisfied with the temporary arrangements, Islamabad’s economic managers moved ahead with the Fund’s blessings. The IMF has reposed confidence in the government’s efforts to sell off PIA shares through ad hoc measure of issuing an ordinance to this effect.
Although, the mainstream opposition party in parliament had announced its opposition to the privatisation plan, the government decided to consult the PPP for smooth sailing of the bill in the upper house of the parliament where the ruling PML-N lacks a majority.