Having a glorious past, but an uncertain future, Pakistan’s ‘national flag carrier’ is presently trying to cope with an existential challenge. The strike observed by PIA’s employees has entered the second week, but the situation still remains quite touch-and-go-deteriorating further.

Last week, the standoff between the federal government and PIA employees over the issue of proposed privatization of PIA resulted in the complete suspension of flight operations of the airline, following the unfortunate death of two protesters in Karachi. Now the flight operations has partially resumed as the airline’s pilots have conditionally called off their strike. Instead of showing any flexibility in the best interest of this troubled airline, the federal government and the joint action committee of PIA employees have kept their ‘principled stance’.

On the other hand, frequently seen among the strikers, the opposition political parties, namely the PTI, MQM and JI, are just playing to the gallery by resorting to typical anti-government rhetoric rather than playing any constructive role to resolve the current crisis.

Regrettably but truly, the so-called national flag carrier has somehow become an’ iconic symbol’, one that represents our national character. The current sorry state of the airline simply signifies how dexterous we are in articulating and achieving our selfish personal interests at the cost of collective welfare of the community. The rampant corruption, mismanagement and cronyism have brought the airline to the brink of bankruptcy. The has-been profitable ‘model airline’ has now become a white elephants, swallowing the billions of rupees of this miserable nation annually. Thus the cost of carrying the national flag has been a little bit high.

For a long time, Bretton Woods Institutions, including the IMF, have been asking Pakistan to privatize its State-Owned Enterprises (SEO’s) under their structural Adjustments Programmes (SAPs). Reportedly, in August last year, the government of Pakistan positively assured the IMF to sell 26% of PIA shares to a strategic investor by March 2016. Therefore, paving the way for its privatization, the PIA Corporation was converted to a Public Limited Company by the federal government in December last year through a hurriedly-promulgated Ordinance.

Ever since, the PIA employees are strongly protesting against the proposed privatization of the airline. In a bid to foil the agitation of PIA strikers, the government also extended the scope of Essential Services Maintenance Act (ESMA), 1952 to PIA employees, banning all union activities for six months. However, this strategy has utterly failed to pacify the protesters so far.

Absorbing the Orient Airways Limited, the PIA Corporation was established under Pakistan International Airlines Corporation Act, 1956. Ever since, PIA has been functioning as an independent statutory corporation in Pakistan. Recently, the federal government, through an Ordinance, has changed legal status of PIA; form a statuary corporation to public limited company. Therefore, now the PIA is supposed to be governed by the Companies Ordinance, 1984 instead of PIAC Act, 1956.

According to audited financial statement for the first quarter (January-March) 2015, the accumulative loss of the corporation increased to Rs228.7 billion. The total liabilities grew to Rs329.7 billion while its total assets were estimated to be only Rs186.7 billion. Since the liabilities of the corporation have outnumbered its assets, therefore, technically speaking, the corporation is simply an insolvent or bankrupt now.

Therefore, the PIACL, being a public limited company, is liable to be wound up or liquidated under the provisions of Companies Ordinance, 1984. Presently there hardly exists any listed public or private company with similar balance sheet in the country. Observably, it is rather an inappropriate and hasty decision made by the government to change the corporate status of the ailing airline before improving its operational efficiency and financial viability.

All over the world, the process of privatization is generally adopted to transfer the ownership of an enterprise or business from public sector to private sector primarily to improve its efficiency and management by minimizing the political influence and bureaucratic control over it. But strangely, in Pakistan, this economic policy has been adopted to get rid of loss-making SOE’s. For a long time, privatization has been portrayed as the only pragmatic option available to treat inefficient and loss-making public sector corporate entities in Pakistan. This may be the primary reason that Pakistan hasn’t succeeded in privatizing any of its loss-making SOE’s so far. In 2006, privatization of Pakistan Steel Mills was overturned by the Supreme court of Pakistan on account of certain irregularities and anomalies found in the privatization process. Now the privatization of PIA is also facing multiple problems even at its initial stage. In fact, there are two known pragmatic methods to deal with loss-making corporate entities- either to improve their efficiency or simply shut them down for good.

It is quite incomprehensible how the government will find a strategic investor, probably having a magical wand, to improve the efficiency of PIA with current balance sheet and operating conditions. How will it deal with surplus employees? How will the minority shareholder be able to call the shots? Will the government undertake to absorb the current liabilities of the airline? What is the plan if the government doesn’t find such investor, or such investors also fail to achieve the goal? In fact, the domestic aviation industry is not vibrant enough to acquire and successfully manage this ailing airline. While making endeavors to privatize PIA, it must also be kept in mind that the net equity of the airline is negative, unlike other loss-making SOE’s like PSM, Pakistan Railways etc. Therefore, presently there are only two viable options available to the government to deal with the airline; either to improve its corporate profile or otherwise let it be wound up like any insolvent corporate body.

Improving the efficiency of PIA to the extent of making it a financially viable corporate entity is undoubtedly a herculean task. But at the same time, it is not something impossible. In fact, a strong resolution, firm commitment and sincerity on the part of federal government are sine qua non for achieving this objective. Regrettably, the government has yet not taken any significant step towards the stabilization of PIA beyond its current privatization move. The incumbent government is also criticized for appointing certain controversial and incompetent individuals to make crucial decisions regarding this ill-fated airline. Now, in order to really make a difference, there will be required a vibrant and dedicated team to overhaul and restructure this airline.

First of all, a professional, competent, honest and upright person should be appointed to head the airline. Similarly, the board of directors should be made to act independently. The long-pursued open sky policy should also be revisited to help PIA regain its lost destinations domestically and internationally. By increasing the number of aircrafts in PIA’s fleet, the employee-to-aircraft ratio can be balanced to the international standards, making the airline commercially viable. If the Punjab government can secure $1.6 billion investment to run metro train on a single route in a particular city, then why the federal government can’t manage to generate financial resources to restructure and revive our national flag carrier to the collective benefit of people of Pakistan and thousands of airline employees?

Prompt and pro-active actions on the part of government are required to save this troubled airline from collapsing altogether. Similarly, instead of opposing and resisting the government’s genuine initiatives to stabilize the airline, PIA employees should actively collaborate and cooperate with the government in the best interest of their organization. They must also understand the gravity of the challenge faced by the airline. In fact, PIA is like a patient who is clinically dead but still manages to survive through artificial respiration provided in the form of government’s extensive bail-out packages. Now, depriving this patient of a life support machine, though for a short while, would be quite fatal.