From Headlines to Headwinds: PIA’s So-Called Turnaround Has A Dark Secret [Opinion]

Look closely, and you’ll see it’s not a rescue, it’s a magic trick. The federal government’s new trick to make Pakistan International Airlines (PIA) look profitable is less of a financial recovery and more of a well-orchestrated illusion, in this writer’s sick eyes. The airline has posted a net profit for the first time since 2003, compared to losses of Rs. 104.5 billion last year. It might look neat on paper, but beneath the surface, nothing real has changed. This sleight of hand might end up costing taxpayers even more down the line. Can’t understand why most analysts on X are calling on people to celebrate this. Failing to prove cash flow for profit is worrying. To make the airline more attractive to buy, authorities have transferred the majority of PIA’s Rs. 660 billion debt off its books to a separate government-owned holding company. The airline achieved earnings per share of Rs. 5.01 in December, translating into an operational profit of Rs. 3.9 billion and a net profit of Rs. 2.26 billion during the period. The airline also achieved an operating margin exceeding 12 percent. As mentioned above, at the heart of the trick is a holding company—a Special Purpose Vehicle (SPV)—created solely to absorb PIA’s massive legacy debt. That debt didn’t vanish. It was just shifted off PIA’s books into this new entity. As a result, the airline’s balance sheet suddenly looks leaner and cleaner. But it’s deceptive. The problem hasn’t been solved; it’s just been hidden behind a curtain. How silly are we? In 2024, PIA was split into “core” and “non-core” entities. The reported profit applies only to the “core,” which retained 85 percent of the assets but just 25 percent of the liabilities. To make the core entity more attractive to buyers, nearly all long-term loans (Rs. 380 billion), employee liabilities (Rs. 38 billion), trade liabilities (Rs. 145 billion), and other losses were shifted to the “non-core” Holding Company. The core business kept only operational liabilities, such as aircraft leases. Then comes the second act: the government has assumed responsibility for many of PIA’s liabilities, especially the loans it had guaranteed. Those liabilities have quietly merged with the national debt. So, while PIA looks like it’s breathing easier, the weight has merely moved—onto the backs of taxpayers. Companies that showed interest earlier have suddenly re-engaged, while operational losses have eased following an 87 percent drop in finance costs to Rs. 10.1 billion, though revenue declined by 14 percent to Rs. 204 billion. And just to complete the illusion, PIA threw in some familiar accounting tricks: revaluing assets like aircraft and land to make them appear more valuable and converting loans into equity, which is basically just writing off the debt and pretending it’s now part of government ownership. It’s all designed to make PIA look appealing to potential investors or buyers, especially with privatization in mind. But let’s be clear—this isn’t a fix. The airline is still hemorrhaging money operationally. It spends more than it earns. The core dysfunction remains untouched. There’s been no real reform to how the airline is run, no overhaul of its structure or spending, and no solid plan for long-term sustainability. See the table above. It clearly shows how PIA has heavily relied on borrowing, there’s a negative net equity of -Rs. 55 billion even after restructuring. Even after shedding Rs. 379 billion in long-term debt to the new holding company, PIA still holds Rs. 15.6 billion in long-term loans and Rs. 30 billion in lease liabilities PIA had Rs. 267 billion in trade payables, of which over Rs. 121 billion were moved to the holding company. These are unpaid bills to suppliers, vendors, and possibly airports or fuel companies. cash position is weak, It has only Rs. 4.5 billion in cash and bank balances before restructuring and just Rs. 93 million left in core PIA post-restructure—barely enough to sustain operations. What the government has done is trade transparency for optics. They’ve dressed up PIA to look healthier than it really is, hoping someone might buy the story—or the airline itself. But investors aren’t fools. They’ll look past the makeup and see the same problems that have plagued PIA for decades. Worse, this maneuver sends a troubling message that instead of dealing with hard truths and pushing real reform, the state is content to risk accounting tactics and shift the burden onto the public. It undermines trust, muddles the country’s financial picture, and sets the stage for another bailout—or another crisis. This kind of financial window-dressing might win headlines today, but it’ll spark questions tomorrow. And when the illusion fades, it’s ordinary Pakistanis who’ll be left footing the bill. Sell to a local business or tycoon and save face. Auctioning to foreign investors will make us look poor because the airline will likely sell for cheap. Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of ProPakistani. The content is provided for informational purposes only and is not intended as professional advice. 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