New Delhi, Feb 12 The privatisation of Pakistan International Airlines (PIA) has been sold as a big reform to end decades of losses, but the opaque deal has turned out to be an example of institutionalised corruption, according to a media report.
The Pakistan government has parked around Rs 650 billion of PIA’s historic liabilities into a holding company, which insulates the buyer from huge accumulated losses. A clean operating entity has been sold to a private consortium led by Arif Habib Corporation on a headline valuation of about Rs 135 billion, of which only around Rs 10 billion translates into actual cash inflow to the state, while the rest is injected as equity into the airline itself, the article in the Colombo-based Asian News Post observed.
Against Rs 650 billion in retained debt, a one-time cash benefit of Rs 10 billion barely registers, leaving the public with a heavily negative net position. Public funds have absorbed past losses and recapitalised the airline, while the private buyer acquires a de-leveraged asset with prospects of future profitability if even modest operational improvements are achieved. "This is not a correction of past corruption; it is its consolidation, where the costs of misrule remain social while the upside of reform is reserved for a small circle of private actors," the article stated.
Over decades, taxpayer money built a sizeable PIA fleet, international routes, and valuable landing rights at key global hubs. Critics point out that these assets have been transferred at valuations below replacement cost, especially once adjusted for the network effects, brand value and regulatory privileges that such routes and slots confer in a congested aviation market. When the state absorbs liabilities, injects equity and then transfers these strategic assets at favourable terms to private hands, the transaction resembles a wealth transfer masked as reform rather than a fair market divestment, the article noted.
"PIA’s privatisation, in its current form, is therefore less a solution than a reallocation of burdens and benefits. The public continues to service a Rs 650 billion debt burden incurred through years of political interference, leakage and mismanagement. In return, it receives limited cash, a minority equity stake, and the hope that private managers will succeed where the state failed, even though the surrounding governance ecosystem remains largely unreformed," it contended.
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