Five prospective buyers show interest in privatization of PIA
The government has drawn interest from five prospective buyers for Pakistan International Airlines (PIA), marking a significant step in its bid to privatize the loss-making national carrier. According to the Privatization Ministry, the contenders include prominent business groups and a military-owned conglomerate.
Expressions of interest were submitted ahead of the June 19 deadline, with
eight parties initially responding. However, only five went on to submit full
qualification documents to acquire up to 100% ownership of PIA. The airline has
accumulated over $2.5 billion in losses over the past decade, though it posted
its first operating profit in 21 years during the 2024–25 fiscal year after
major restructuring.
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of flag carriers in subcontinent: Challenges and Opportunities
This marks Pakistan’s first major privatization
in nearly two decades and is viewed as a critical test of the government’s
ability to reform state-owned enterprises and meet conditions under a $7
billion IMF bailout.
Who's in the Running?
The five qualified groups include:
·
A consortium
led by Lucky Cement Ltd, with Hub Power Holdings Ltd, Kohat Cement Co
Ltd, and Metro Ventures.
·
An investment group
headed by Arif Habib Corp Ltd, including Fatima Fertiliser Co Ltd, The
City School, and Lake City Holdings.
·
Fauji Fertiliser
Company Ltd, a military-run conglomerate.
·
Pakistani airline Air
Blue Ltd.
·
A consortium featuring
Bahria Foundation, Serene Air, and US-based Equitas Capital LLC.
“The government will now review the
submissions and grant qualified bidders access to detailed data for due
diligence,” the ministry stated.
Full Privatisation This Time
PIA, once a respected international carrier,
resumed European operations in January after a four-year suspension due to EU
safety concerns. The airline is currently pursuing UK certifications,
considered crucial for its recovery. Industry analysts expect the successful
bidder to partner with an international airline to manage operations.
A previous sale attempt fell through after a
$36 million offer from real estate developer Blue World City fell short of the
$305 million floor price. This time, the government is offering full ownership,
has removed sales tax on leased aircraft, and will shield the buyer from most
legal and tax liabilities. Additionally, around 80% of the airline's debt has
been absorbed by the state.
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Commission suggests tightening of criteria for PIA bidders
“We’re targeting Rs86 billion in privatization
proceeds this year,” Privatization Minister Muhammad Ali told Reuters. “In the last round, only 15% of
proceeds would’ve gone to the government—this time, the structure is more
investor-friendly.”
What’s Next?
Bidders are expected to be pre-qualified in
early July. Due diligence will last between two and two-and-a-half months, with
final bids and negotiations scheduled for the fourth quarter of 2025.
The government hopes the PIA sale will
reinvigorate its broader privatization program, which includes the Roosevelt
Hotel in New York and several power sector entities, targeted for sale by
mid-2026.
“We’re expecting over $100 million from the
Roosevelt Hotel as the first payment within this year,” Minister Ali added.
Source: Dawn