- There is only one day left until the deadline for submitting privatization bids for PIA.
- Concerns loom over potential delays in the PIA sale.
- The privatization of the General Investment Authority is a priority within the framework of the International Monetary Fund program.
ISLAMABAD: Only one consortium has submitted pre-qualification documents for the privatization of Pakistan International Airlines (PIA) despite the approaching deadline for bidding.
Sources familiar with the situation said that with only one day remaining in the deadline, there are concerns about a possible delay in the sale process.
The Privatization Commission prepared for the auction scheduled to be held on October 31, invited media and key stakeholders and advised PIA officials to remain alert.
Initially, the deadline was extended to October 31 after the International Monetary Fund requested that it be completed by the end of September.
The International Monetary Fund has made the privatization of state-owned enterprises such as PIA a priority under the new loan program, which emphasizes economic reforms aimed at achieving financial stability.
Of the six groups pre-qualified to bid, five groups withdrew, leaving only one bidder remaining. The group reportedly deposited the required “earnest money” with the Privatization Commission on Tuesday, confirming its intention to participate.
The shortlisted companies include private airline Airblue Ltd, Arif Habib Corporation Ltd, Fly Jinnah by Air Arabia, YB Holdings Pvt, Pak Ethanol Pvt and real estate consortium Blue World City.
Earlier this month, qualified bidders, who had initially agreed to a 60% stake, pushed for full ownership of PIA, citing significant risks associated with limited control.
In response, the government raised the offer to 76% of the stake, but bidders expressed further concerns about the airline’s financial burdens, aging fleet, and operational challenges.
The remaining bidders have called for 100% ownership, arguing that a significant investment – estimated at $500 million – would be necessary to modernize PIA’s fleet, especially in light of the impending retirement of 18 wide-body aircraft within two years.
The airline’s approximate debt of Rs 200 billion and bank financing requirements are adding to the reluctance of bidders, coupled with complexities in securing insurance.
PIA’s current fleet of small charter aircraft would require significant investment in fleet renewal and operations if acquired, with the discontinuation of international routes to Europe and the US further impacting the airline’s attractiveness.
Potential buyers have urged the government to restore these routes to improve the airline’s profitability outlook.
Another challenge is Pakistan’s “open skies” policy, which allows foreign airlines to operate freely in the country.
Bidders have expressed concerns that without restrictions on foreign competition, PIA’s recovery prospects may remain limited.
Additionally, presenters raised issues around workforce retention, noting that PIA employees are protected under local labor laws.
The government’s requirement to retain employees, along with their pension plans, for a minimum of three years has also raised concerns. Potential buyers say the airline is overstaffed, adding an additional burden on future operators.