ISLAMABAD: As the deadline for the privatization of Pakistan International Airlines (PIA) approaches, only one consortium has submitted its prequalification documents for the bid.
With just one day left before the cut-off time, there are growing concerns about possible delays in the sale, according to sources familiar with the situation.
The Privatisation Commission is preparing for the auction scheduled for October 31, having invited media and key stakeholders while advising PIA officials to remain on standby.
The deadline was initially extended to October 31 at the request of the International Monetary Fund (IMF), which sought completion of the process by the end of September. The IMF has prioritized the privatization of state-owned enterprises like PIA under its new loan program, emphasizing economic reforms aimed at achieving fiscal stability.
Of the six groups that were pre-qualified to bid, five have withdrawn, leaving just one bidder. This group reportedly submitted the required “earnest money” to the Privatisation Commission on Tuesday, confirming their intent to participate.
The initial bidders included private airline Airblue Ltd, Arif Habib Corporation Ltd, Fly Jinnah by Air Arabia, YB Holdings Pvt, Pak Ethanol Pvt, and the real estate consortium Blue World City.
Earlier this month, the prequalified bidders, who initially agreed to take a 60% stake, demanded complete ownership of PIA, citing the substantial risks associated with limited control. In response, the government increased its offer to a 76% stake, but bidders raised further concerns regarding the airline’s financial burdens, aging fleet, and operational challenges.
The remaining bidder has called for a 100% ownership stake, arguing that significant investments — estimated at around $500 million — will be necessary to modernize PIA’s fleet, especially with 18 wide-body aircraft set to retire within the next two years.
PIA’s debt of approximately Rs200 billion and its need for bank financing further contribute to bidder hesitance, along with complexities related to securing insurance.
Acquiring PIA’s current fleet of smaller leased aircraft would also require considerable investment in fleet renewal and operations, compounded by the halted international routes to Europe and the US, which diminishes the airline’s attractiveness to potential buyers.
Prospective buyers have urged the government to restore these routes to enhance the airline’s profitability outlook.
Another challenge stems from Pakistan’s “open skies” policy, which permits foreign carriers to operate freely within the country. Bidders have expressed concerns that without restrictions on foreign competition, PIA’s recovery prospects could remain limited.
Additionally, bidders have highlighted issues regarding workforce retention, as PIA’s staff is protected under local labor laws. The government’s stipulation to retain employees, along with their pension plans, for a minimum of three years has also raised concerns. Prospective buyers argue that PIA is overstaffed, adding another burden on future operators.
