PIA Privatisation: Four Bidders Pre-Qualify as Government Targets Mid-December Sale

The privatisation process of Pakistan International Airlines (PIA) has entered a critical phase. Following a failed attempt last year, the government of Pakistan confirmed the pre-qualification of four consortia interested in acquiring a majority stake in the national carrier. According to local media outlet The Nation, the Privatisation Commission approved the transaction structure, which envisages the divestment of 51% to 100% of shares, including management control.

The list of pre-qualified bidders comprises major local players: Lucky Cement Consortium, Arif Habib Corporation Consortium, Fauji Fertilizer Company Limited, and the airline Air Blue Limited. These groups met the technical and financial requirements set by the authorities, while other interested parties were disqualified.

As detailed by the Commission, the selected candidates now have access to the Virtual Data Room to conduct due diligence. Furthermore, they are authorized to carry out site visits and participate in pre-bid conferences.

Accelerated Timeline

The government aims to close the deal before the end of the year. During a meeting of the National Assembly's Standing Committee on Privatisation, the Secretary of the Privatisation Ministry, Hammad Shamimi, indicated that the intention is to hold the final bidding by mid-December.

"Discussions with bidders are ongoing to finalise commercial terms," the official noted, according to The Nation. The goal is to accelerate a process that failed to materialize in October 2024 due to a lack of investor interest at the price points established at that time.

A More Favorable Scenario

Unlike the previous attempt, the outlook for the sale of PIA shows signs of improvement. The airline recently secured the lifting of restrictions on flights to the United Kingdom and the European Union, recovering key high-yield routes. Additionally, the government executed a financial clean-up by transferring approximately 80% of the company's historical debt to the state's books, relieving the balance sheet for the future buyer.

PIA currently flies from Islamabad to Paris-CDG and Manchester twice a week. The medium- and long-haul network is complemented by Toronto, Kuala Lumpur, and Beijing. In the Middle East, its network reaches 14 destinations, and domestically, it operates in 13 cities.

The company hopes to return to the United States with flights to New York and Chicago once Pakistan regains Category 1 status from the Federal Aviation Administration, which it lost in 2020 following a scandal involving the falsification of pilot licenses.

PIA's fleet consists of 17 Airbus A320s (average age 16.5 years), 9 Boeing 777-300ERs (18 years), 6 B777-200ERs (20.8 years), 2 B777-200LRs (19.8 years), and 3 ATR 42-500s (19.1 years).

Regarding valuation, the Ministry will seek approval from the federal cabinet to set the reserve price. In the previous round, this value was set at PKR 85 billion, a figure the market considered too high at the time.

Labor issues remain a sensitive point in the negotiations. Committee Chairman Muhammad Farooq Sattar emphasized the need to safeguard jobs following the handover.

"Safeguarding PIA employees' jobs post-privatisation is essential," Sattar highlighted during the session, adding that staff retention should be based on "performance and merit," ensuring fair payment of pensions and benefits. The committee also instructed that the airline's unions be consulted to ensure a transparent process.