Islamabad: Pakistan International Airlines (PIA) is grappling with a severe financial crisis, prompting the institution to consider divesting its core business and physical assets to settle its mounting liabilities.
The government is contemplating the creation of two separate entities – one for core operational activities and another for asset maintenance.
Additionally, a holding company will oversee all remaining assets.
PIA's accumulated losses have now surpassed Rs743 billion, with some insiders suggesting that this figure does not even include outstanding tax dues of Rs50 billion to the Federal Board of Revenue (FBR).
As the restructuring process commences, the government is concurrently exploring privatization options.
PIA has already engaged a consultant to oversee its restructuring and has begun soliciting applications.
Under the proposed restructuring, PIA will be split into two entities.
The first entity will handle core operations, including operating PIA aircraft on various routes. After restructuring, this entity will be privatized.
A holding company will be formed to manage physical assets and liabilities.
Government sources have indicated that the government's financial guarantee to PIA has been capped at Rs263 billion, and it recently secured guarantees of Rs17-18 billion from domestic banks.
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