EY led consortium advising Pakistan's flag carrier on privatization

Pakistan’s national flag carrier, Pakistan International Airline (PIA), is flying into some serious turbulence. Part of the solution is being sought in a large privatization of the airline – with a consortium of consultants, bankers, and lawyers brought on board to guide the process.

Despite a storied history going back to 1940s British India, Pakistan’s national carrier has for several years been on the verge of financial collapse. A row over safety standards in 2020, which led to the airline being temporarily barred from operating in parts of Europe and the United States, was just the beginning of the trouble. That ban followed after one of the airline’s planes crashed in Karachi, tragically killing 66 people.

Owing to these issues, the airline has publicly announced the move to privatize, with a spokesperson commenting in October that it could be done quickly, which is key because the airline is currently incurring billions of rupees in losses.

In November, the Pakistani government launched a tender process to select consulting firms that could support the process of privatizing PIA. Tender documents show that there was great interest from consultancies in the strategic project, with a range of players and consortia submitting bids.

After the bids were considered, a consortium led by EY was selected as the winner. The team also includes members from Dubai-based Bauer Aviation Advisory, Pakistani public relations firm Nutshell, real estate consultancy Knight Frank, as well as law firms Haidermota & Co and Freshfields Bruckhaus Deringer.

Other firms that participated in the bidding process included Alvarez & Marsal, Accenture, Oliver Wyman, Houlihan Lokey, and Rothschild, as well as a variety of law firms that they brought into their consortium.

The EY led consortium is currently working on a preliminary report which is planned to be completed by January 2024. It is still not exactly clear if there will be a single buyer or if a number of different backers will emerge.

Last month, Pakistan’s Federal Board of Revenue froze 28 of PIA’s accounts at the same time that a team from the EU’s Aviation Safety Agency was in Pakistan to conduct a physical audit on the airline. Around 7,000 PIA employees were not paid last month. The union representing the airline’s workers publicly slamming the leadership of both the company and the government.

To make matters worse, the ongoing economic problems in Pakistan has not made the government particularly keen on continuing to subsidize loss-making companies like PIA, which has already been bailed out more than once before. There was reportedly some interest from Qatar in purchasing the airline for around $2 billion.

PIA is not the only national airline that called in consultancies this year to help with major financial problems. Earlier, Malta’s struggling flag carrier Air Malta brought in top dollar consultants to provide strategic and financial advice in its restructuring process.

Oman Air meanwhile has flown in Oliver Wyman to oversee a financial and operational restructuring operation.