PIA Conversion Act Amendment Bill Introduced in the Senate to Attract Foreign Investment in the Airline

[Abbas Ali]

Today, Pakistan Minister for Aviation Khawaja Saad Rafique introduced "PIAC (Conversion) Amendment Bill - 2023" to further amend "PIAC (Conversion) Act - 2016".

The Aviation Minister informed the Senate that up to PKR 112 billion loss from January to December 2023 by PIA expected. Airline's loss expected to increase to PKR 259 billion per year by year 2030. Pakistani taxpayer cannot afford this burden.

Money being spent on debt servicing of PKR 742 billion PIA debt. PIA has to borrow more loans for debt servicing. Tata Group took over the operations of debt-ridden Air India. Orders for large number of aircraft have been placed by Air India under TATA Group.

"PIAC (Conversion) Amendment Bill - 2023" aims to attract direct foreign investment in PIA.

PIA is operating a fleet of 28 aircraft. Aircraft leasing companies are seeking return of their aircraft leased out to PIA due to falling credit rating of PIA. Leasing companies are reluctant to lease out new aircraft to PIA.

Devaluation of Pakistani Rupee (PKR) and increasing fuel prices also affecting PIA financial health. Loss of PKR 71 billion per year suffered by PIA due to suspension airline's Europe and UK flights.

In future, a government holding company will be established to park PIA liabilities. PIA without liabilities will be offered to investor. Future Government of Pakistan to decide percentage of government shares in PIA to be offloaded. PIA needs injection of billions of US dollars investment to survive otherwise PIA will go down along with taxpayer's money causing international embarrassment.

PIA control will have to be handed over to investor/private sector, said the aviation minister.

"PIAC (Conversion) Amendment Bill - 2023" referred to a Senate standing committee for consideration/review.

Abbas

[Abbas Ali]

PIAC (CONVERSION) ACT 2016

Pakistan International Airlines Corporation (PIAC) has been converted via Pakistan International Airlines Corporation (Conversion) Act, 2016 (Act No. XV of 2016), dated 19 April 2016 from a statutory corporation to a company governed by the Companies Ordinance, 1984. The new entity is called Pakistan International Airlines Corporation Limited (PIACL).

Through the PIAC (Conversion) Act, 2016, PIACL has succeeded to all the assets, liabilities, duties and obligations of PIAC. Similarly, PIACL is now entitled to the benefits of all notifications, licenses, permissions, sanctions, authorizations, concessions, decrees, international air service authorizations, agreements, orders and benefits issued or granted in favour of PIAC. All employees of every grade and category of PIAC are hereby assured that they stand transferred by the PIAC (Conversion) Act, 2016 to PIACL with the same designation and on the same terms and conditions as they held in PIAC.

All lenders (foreign and local, fleet and non-fleet) and other creditors of PIAC shall continue to enjoy from PIACL, the same contractual benefits and protections that they enjoyed from PIAC. All guarantees given by the Federal Government to secure PIAC’s obligations will now continue so as to secure the obligations of PIACL.
The shareholders of PIACL shall be deemed without any fresh issuance of shares to own and hold the same number of shares with the same rights and privileges (including as to class, kind, and face value) as they owned and held in PIAC immediately prior to the conversion.

All proceedings of every description and nature whatsoever by or against or relating to PIAC pending on the date of Conversion, in any court, tribunal, or other authority shall be continued, defended, prosecuted and enforced by or against or relating to PIACL in the same manner and to the same extent as they would have been continued, defended, prosecuted and enforced by or against or relating to PIAC, and the same shall not abate, be discontinued, prejudiced or otherwise affected by the conversion.

Info Source: PIA

[Amaad Lone]

For the past 15 years I have been advocating that PIA needs to reduce its debt to survive.

Today thanks to our accumalated interest payments the debt is so high that PIA cannot survive.

Had PIA sold the hotels and paid off the debt 15 years ago the situation would be very different today.

PIA has not made a net profit since 2004.

Half of the total losses are interest payments on loans.

25 percent is exchange rate losses.

No governemnt can fix PIA unless the debt issue is resolved.

[Abbas Ali]

Protest at PIA Head Office in Karachi staged by airline's employees. PIA employees' Collective Bargaining Agent (CBA) People's Unity associated with Pakistan People's Party (PPP) gave call for protest against airline's privatization.

Abbas

[Abbas Ali]

On August 5, Senate Standing Committee on Aviation meeting chaired by its Chairperson/Convener Senator Hidayat Ullah at Ministry of Aviation in Islamabad after examining "PIA Conversion Act Amendment Bill - 2023" in detail agreed to the bill with amendments.

Abbas

[Abbas Ali]

On August 6, the Senate of Pakistan passed "Pakistan International Airlines Corporation (PIAC) Conversion Amendment Bill - 2023" to further amend Pakistan International Airlines Corporation (PIAC) Conversion Act - 2016.

Finance Minister Senator Ishaq Dar presented bill on behalf of Aviation Minister Khawaja Saad Rafique.


Finance Minister Senator Ishaq Dar presenting bill in the Senate of Pakistan on behalf of Aviation Minister Khawaja Saad Rafique.

Abbas

[Abbas Ali]

August 7, National Assembly of Pakistan session agenda includes:

Minister for Aviation Khawaja Saad Rafique to move "Pakistan International Airlines Corporation (PIAC) Conversion Amendment Bill - 2023" as passed by the Senate of Pakistan to further amend "Pakistan International Airlines Corporation (PIAC) Conversion Act - 2016".



Abbas

[Abbas Ali]

On August 11, President of Pakistan Arif Alvi approved "Pakistan International Airlines Corporation (PIAC) Conversion Amendment Bill - 2023".

The amendment bill aims to attract direct foreign investment in PIA under Public-Private Partnership (PPP).

Abbas

[London Flyer]

Etihad has experience doing this with Air Berlin and Alitalia although neither worked out for them. If Turkish could be enticed back that could still be successful.

Singapore are the other airline that have invested in this way in the past with Virgin and Vistara but not sure how much PIA would sync with their network. Then of you have distressed/turn around private equity but unions interference will probably keep them away.

[Abbas Ali]

Protest in Karachi staged by airline's employees on August 11. PIA employees' Collective Bargaining Agent (CBA) People's Unity associated with Pakistan People's Party (PPP) gave call for protest against airline's privatization/investment in the airline from private sector/foreign investor.



Abbas

[Amaad Lone]

Protest in Karachi staged by airline's employees on August 11. PIA employees' Collective Bargaining Agent (CBA) People's Unity associated with Pakistan People's Party (PPP) gave call for protest against airline's privatization/investment in the airline from private sector/foreign investor.

These employees were probably hired because of their association with PPP and will now have to PERFORM AND GIVE RESULTS and not just get paid sitting on their chairs not doing anything and using all the facilities.

These employees will be the first ones to go.

[Karachi Aviator]

Most importantly, are they even genuine employees or not?