PIA privatisation: Final auction date revealed
Six consortia pre-qualified to bid for 60% stake in Pakistan International Airlines
ISLAMABAD: In a decisive move to privatise Pakistan International Airlines (PIA), the government has announced that the final auction for the national flag carrier will take place on October 30.
This much-anticipated step aims to attract serious investors and address the operational challenges that have plagued PIA for years.
Finance Minister Muhammad Aurangzeb, speaking at the World Bank and IMF annual meetings in Washington, confirmed to AFP that the auction had faced delays due to macroeconomic instability and the need for comprehensive due diligence by potential investors. He stated, “The reality is, when any foreign investor comes in, or even the local investor... they want to ensure that the foundation is there,” emphasising the importance of stability for attracting investment.
Aurangzeb added that Pakistan had been behind on profit and dividend repayments when the current government took office, which necessitated corrective measures.
When is PIA auction scheduled?
The auction was initially planned for October 1, but was postponed due to low bidder interest and ongoing litigation issues concerning PIA's ageing fleet and regulatory matters.
Parliamentary Secretary for Communications Gul Asghar Khan informed the National Assembly that all outstanding issues have now been resolved, allowing the auction to proceed as scheduled on October 30.
Khan remarked, “PIA assets have been parked separately as its operational assets have been separated,” highlighting the government's efforts to ensure clarity in the bidding process. The separation of operational assets from other holdings is intended to enhance transparency and attract serious investors.
Who are the bidders?
Six consortia have been pre-qualified to bid for a 60% stake in Pakistan International Airlines (PIA). The shortlisted bidders include notable firms such as Fly Jinnah Ltd, Air Blue Ltd, Arif Habib Corporation, Pak Ethanol (Pvt) Consortium, Blue World City, and a consortium led by YB Holdings (Private) Limited.
Why PIA is being privatised?
The government’s push for privatisation is part of a broader economic reform agenda driven by pressure from the International Monetary Fund (IMF). Along with PIA, the outsourcing of operations at Islamabad's international airport is also planned for November. This comprehensive approach is crucial for stabilising Pakistan’s economy, which is currently grappling with high inflation, dwindling foreign reserves, and a public debt estimated at 69% of GDP.
Minister of State for Finance Ali Pervaiz Malik reiterated the importance of these reforms, stating during a National Assembly session that no restrictions have been imposed on the import of raw materials post-IMF programme finalisation. He noted that “the decline in inflation means that the price hike ratio has dropped,” underscoring the need for structural changes to enhance economic resilience.
As Pakistan moves closer to the final auction date, hopes are high for a successful sale that could provide a much-needed lifeline for PIA and play a pivotal role in enhancing the overall economic outlook.
Pakistan International Airlines (PIA) was founded in 1955 as a subsidiary of the Government of Pakistan, evolving from the earlier Orient Airways established in 1946. Initially operating with a few aircraft, PIA quickly grew into a prominent international carrier, known for its extensive network across Asia, Europe, and North America. At its peak in the late 1990s, the airline operated around 40 aircraft. However, it has faced financial difficulties and management challenges, leading to a reduction in fleet size and routes. As of recent reports, PIA operates just over 30 aircraft, focusing on regional and international destinations while undergoing restructuring efforts to address its operational inefficiencies.