INP-WealthPk

Growing Liabilities Make PIA ‘Perfect’ Case for Privatisation

May 30, 2022

By Syed Marwan Shah ISLAMABAD, May 30 (INP-WealthPK): Current liabilities of Pakistan International Airlines (PIA) exceeded its assets by a massive Rs269 billion in the calendar year (CY) 2021, which calls for the national flag carrier’s swift privatisation to turn it around. According to the PIA’s annual report, the carrier’s total assets recorded over Rs45 billion against the total liabilities of Rs314 billion, showing a meteoric Rs269 billion difference in 2021. PIA’s Assets & Liabilities Source: PIA annual report As demonstrated in the above table, the liabilities of the national carrier for the last six years – from 2016 to 2021 – have been exceeding its assets. A graphical representation is also used for assets and liabilities to show a more comprehensive view, where the assets and liabilities gap is widening year by year. Furthermore, the national flag carrier sustained a net loss of Rs50 billion in 2021, which is 44.7% over the Rs34.6 billion loss sustained in 2020. Tuaha Adil, a research economist at the Policy Research Institute of Market Economy (PRIME), informed WealthPK that the only option left for the national flag carrier was to get privatised because the airline could not be run on professional lines due to its continuous huge losses. “The airline needs a huge investment to overcome its losses.” He pointed out that the government changed many chief executive officers of the national flag carrier in the past in order to turn it around but to no avail. “The corporation downsised and laid off a number of employees in the past three years, but regrettably, its fortunes remain to be changed.” The main thrust for privatisation, he said, is the belief that private sector units are more efficient than those of the public sector. Tuaha Adil said that the government could take a cue from Pakistan Telecommunication Company Limited – which was privatised back in 2005 – helping it to earn a whopping Rs77 billion in revenues in 2021. Unless privatised, PIA would continue to suffer losses and burden the exchequer notwithstanding many changes made at the helm from time to time. The world over, many airlines have been generating handsome profits since their privatisation, including Air Canada, LAN Chile, Vietnam Airlines, and Kenya Airways. A typical example is British Airways, which earned around $5 billion in 2021. Likewise, the Air India, which was privatised in January 2022, is also making huge earnings.