Flight Delayed: The PIA Privatisation Fiasco

Tahir Imran Mian breaks down the latest process to privatise the national flag carrier, points out a few fundamental non-starters which resulted in the shambolic display that was broadcast on our screens

Flight Delayed: The PIA Privatisation Fiasco

What happened with the bidding for the national flag carrier, Pakistan International Airlines (PIA), was not unexpected because right from the outset, I was of the view that this process was a sham.

The sad part is that PIA will end up losing over $550 million by the end of December this year. A big part of these losses are due to the stupid mistakes made by the caretaker government and its successor, the incumbent government, especially the privatisation ministry. I can also bet that reporters will easily disregard all that was unleashed on the already heavily saddled national carrier when they write about the losses at the end of the fiscal year.

In my two decades of reporting in Pakistan, I have seen the government put forth many such plans with very tall claims, only to ultimately see them all crash and burn. I now consider it an established fact that PIA is unlike any of the other departments operated by the state that have been put on the anvil. You may thus term PIA a 'hard candy' to sell. Even the best-laid plans to sell it have failed because they lack a basic understanding of the aviation business in Pakistan, which is very different from how it operates in many other parts of the world.

In the current process, a few fundamental non-starters resulted in the shambolic display that we saw getting broadcast on our screens. I will list below how things transpired, the way they are, and what should have been done instead.

The way the PDM government hurriedly passed key components of the privatisation process for PIA before the end of their brief term was among the first indications that there was no cogent plan and no objective before them. All they wanted to do was tick some boxes to ensure that the money they were promised was delivered by the International Monetary Fund (IMF) after their departure and upon the arrival of the PDM government if they got elected again.

Even the man on the street knows and behaves better than the former babu who was handed complete control of the privatisation process, where the job was to make the entities on the anvil look presentable while avoiding any issues that might spook the buyer

When the caretaker government took over, they appointed Fawad Hassan Fawad, the former principal secretary to former prime minister Nawaz Sharif, as the caretaker minister for privatisation. As expected, he started making the same kind of tall claims about privatisation, which I had heard throughout my career coming out of the mouths of people who thought they knew PIA and assumed they could manage it. The tall claims of completing the privatisation of the national flag carrier within months and finding new buyers and interested parties from God knows where, as well as a lot of other statements that he frequently dished out on various media platforms. 

But behind the scenes, he handed out a $7.4 million consultancy to Ernst & Young to help the government sell PIA. However, by far the most dangerous and problematic thing he did was tell PIA not to plan for beyond six months. Meaning that the airline just had to plan for or execute the plans it had for the six months after the caretaker government took over. Secondly, he effectively inserted himself between PIA and its financial arrangements with local banks as well as other creditors, breaking the status quo and starting a pissing contest between state-owned bodies. Whether it was with the Federal Board of Revenue (FBR) versus PIA or Pakistan State Oil (PSO) versus PIA, this was bad optics.

Imagine if you were an investor and you saw two state entities beating the hell out of each other while the government was trying to attract you to buy one of them, would you proceed with such a transaction? You have to understand that investors are the most risk-averse people who fly away from even the smell of trouble, let alone when two state institutions are fighting publicly, generating enough negative publicity rather than showing an effort to make the proposal attractive. Even the man on the street knows and behaves better than the former babu who was handed complete control of the privatisation process, where the job was to make the entities on the anvil look presentable while avoiding any issues that might spook the buyer. Instead, the minister helped facilitate negative propaganda through knee-jerk reactions and poor decisions which made no sense. 

One wonders what grave urgency prompted the caretaker minister to meddle in PIA's financial arrangements such that they could result in headlines appearing on national television and in newspapers, drawing negative attention towards PIA's financial woes. Or did he ask PIA not to plan beyond six months because he or somebody else associated with the process knew that the whole process would last much longer than the caretaker government's tenure and deep into the incoming government's tenure.

The worst part of this entire saga is that the above-described pissing contests, subsequent negative propaganda and the mismanagement nonsense were all avoidable because it was not going to cost the taxpayers any more than what they were already paying. But now, after this whole fiasco has collapsed, it has further burdened the taxpayers with many more millions in losses of an already embattled and doomed airline. The people have been left with no plan while the status quo has been broken, reducing the airline to a fraction of what it used to be or what it is supposed to be. This means that if 50% of the effort was required to sell it a year and a half ago, it will now require 90% effort while its overall price, valuation of assets and everything else will be much different.

I knew from the beginning that this whole process was a non-starter and I had said so publicly on the social media platform 'X' (formerly known as Twitter). I even ensured that my tweets or messages reached the relevant people. Prominent television anchor Asma Shirazi confronted Fawad Hassan Fawad on her show by reading out some of these words.

Those who want to achieve their goals prepare the projects, create a compelling sales pitch and go on to deliver it with conviction. Something we failed to see during the whole process

On September 24, 2023, I tweeted: "Fawad Hassan Fawad want to starve PIA to death. I wish him all the luck in the world." 

October 24 last year, I tweeted: "Typical, superficial, lousy, knee-jerk editorial by Dawn. I'm not very surprised because I predicted on @adilshahzeb's show that Fawad Hassan Fawad has told everyone to hand off PIA. Banks were told not to pay, the finance ministry was told to not extend the guarantee, and PSO was told to ask for advance payments."

The same day, I wrote: "What @Official_PIA needs is a consistent strategic plan with independent management to oversee it. What PIA gets is knee-jerk reactionaries on steroids. The likes of Tariq Kirmani, Ahmed Saeed, Shujaat Azeem, Ghulam Sarwar Khan, Khawaja Saad Rafique & now Fawad Hassan Fawad. Then people wonder how PIA reached where it is now."

Given all these warnings, the lack of preparation and the haste with which consultancies were handed over and like-minded people were hired, it was clear that the objective was to get lucky or die trying. Those who want to achieve their goals prepare the projects, create a compelling sales pitch and go on to deliver it with conviction. Something we failed to see during the whole process.

What we have seen thus far has been a half-hearted, semi-cooked, knee-jerk attempt to benefit consultancies and spend money while they could because, with this entire process, I don't even believe those at the helm of affairs were convinced they want to go through with it. And today, we have seen the results.

Yes, some parties were engaged, and they entertained the government's invitations to look at the sales pitch, but that is about it, nothing more. Only one group walked the talk and put the money where their supposed intentions were. The rest just engaged casually and departed from the process at the outset. And you can't really blame them if you also saw the privatisation division's sales team and their consultants making the sales pitch. If paid actors had been hired to do the job,  perhaps they would have done a better job than those who had been paid to run this process.