Pakistan is set to proceed with the plan to privatise its loss-making flag carrier, Pakistan International Airlines (PIA).

The Privatisation Commission (PC) board has just approved the transaction framework to divest a 51% stake in the airline, according to media reports, quoting government officials.

The approval was granted after the transaction framework, which seeks to divest the majority of the airline’s shares and split its assets and liabilities, was presented by a consortium led by Ernst and Young, The Express Tribune reported.

As part of the conditions of the sale, any foreign buyer will be required to have a local partner to acquire a majority stake in the airline.

The privatisation body had confirmed that it had taken into consideration the “legal segregation plan” and transaction structure to divest the shares of PIA during a meeting last January 8.

“The financial advisors presented a proposal for the legal segregation of the [airline] aimed at the separation of core aviation business and assets for eventual divestment of core aviation services in the first instance,” the board said in a statement.

Subsequent to the approval of the board, the transaction structure will still need to be taken to the Federal Cabinet for final approval, the board said in a related statement.

The state-owned carrier has been incurring financial losses for years and was banned from operating in the European Union (EU), United Kingdom and the United States (US) in 2020 following safety and regulatory issues, including concerns about the airline’s pilot licensing.

(Writing by Cleofe Maceda; editing by Seban Scaria) seban.scaria@lseg.com