Pakistan’s government is mulling carving legacy debt and all non-core assets out of PIA – Pakistan International Airlines (PK, Karachi Int’l) in order to improve the privatisation prospects of the airline, The Nation has reported.
According to the plan, a new government-owned special purpose vehicle would take over all non-essential assets of the airline, such as land plots in Pakistan and abroad, real estate (including hotels in France and the United States), and an engineering complex. It would also assume responsibility for liabilities, although it is not clear whether it would also include current operational debts.
The government hopes that the leaner airline will be profitable and thus more attractive to prospective investors.
This scheme resembles a similar approach adopted by neighbouring India in regard to the planned privatisation of Air India.
The division of PIA’s assets and liabilities into two companies could happen before April 15, 2018, which would then allow the Pakistani government to proceed with the privatisation. Pakistan plans to divest up to 49% of the airline’s stock, retaining majority stake and control over the company.