The caretaker government has recently accelerated the process to put the loss-making airline up for sale after it completed a restructuring plan, Reuters has reported. Officials had said the restructuring plan would be approved ahead of the Feb. 8 national election.

The cabinet gave its approval to the plan on the recommendation of Pakistan's privatisation commission, a body assigned to sell off all loss-making state-owned enterprises (SOEs).

The restructuring plan completed by transaction adviser Ernst & Young has divested the PIA into two entities; one 'clean' one and the other to be parked in a holding company with legacy debt, which includes negative equity of 825 billion rupees ($2.95 billion) in loans, creditors' money and losses.

The clean entity will be offered for sale.

"These steps will help attract the investors toward PIA," the statement from the prime minister's office said.

In deep economic crisis, Pakistan agreed last June to overhaul the SOEs under a deal with the International Monetary Fund (IMF) for a $3 billion bailout.

The outgoing government decided to privatise PIA just weeks after signing the IMF agreement.

The caretaker administration, which took office in August to oversee the Feb. 8 election, was empowered by the outgoing parliament to take any steps needed to meet the budgetary targets agreed with the IMF.

($1 = 279.2500 Pakistani rupees)

(Reporting by Asif Shahzad; Writing by Shivam Patel and Gareth Jones)

By Asif Shahzad