The privatisation bidding for Pakistan International Airlines (PIA) has been postponed by the government until October 31, reflecting ongoing challenges within the airline and concerns from potential bidders. Sources indicate that this delay is primarily attributed to low interest from bidders and a range of unresolved issues, including court cases and the ageing fleet. The decision follows earlier disclosures from the National Assembly’s Standing Committee on Privatisation, which had previously set the bidding deadline for October 1. The ongoing postponement highlights the complexities surrounding PIA’s privatisation as the airline grapples with significant operational and regulatory hurdles.
A notable factor affecting the privatisation process is the European Union’s (EU) ban on PIA flights to Europe, a historically profitable route for the airline. This ban is causing concern among potential bidders who may be wary of investing in an airline with restricted access to critical markets. However, there is optimism from PIA’s management regarding the ban’s potential resolution. CEO Amir Hayat has indicated that an audit was recently completed, and the European Union Aviation Safety Agency (EASA) is anticipated to lift the ban by the end of 2024. This development could enhance the airline’s appeal to investors, provided that the issues leading to the ban are effectively addressed.
As part of the privatisation process, six consortia were pre-qualified to bid for a 60% stake in PIA, including notable names such as Fly Jinnah Limited and Air Blue Limited. Despite this interest, the government’s recent discussions revealed that Turkish Airlines has dismissed claims of interest in acquiring PIA, adding another layer of uncertainty to the bidding landscape. The secretary of the Privatisation Commission, Usman Bajwa, has been proactive in engaging with the National Assembly’s Standing Committee, assuring them that final bid documents were made available to the pre-qualified bidders as of September 18. These parties are now in the critical due diligence phase, emphasising the need for thorough assessment before making a financial commitment.
The structural challenges facing PIA, particularly its ageing fleet, have been a focal point in discussions surrounding the airline’s future. Currently, PIA operates a fleet of 20 aircraft, with plans to expand to 40-45 planes over the next three to five years. Bajwa has emphasised the necessity of introducing new aircraft to lower the average age of the fleet from 17 years to 10, a move that is expected to enhance operational efficiency and attract potential bidders. Furthermore, the retention of human resources has been highlighted as a priority, with commitments to safeguard employee benefits and pensions for both current and retired staff.
As the privatisation process continues to unfold, government officials have underscored the need for bidders to seek approval before discontinuing or selling any of PIA’s key international routes. This requirement is particularly relevant for routes to destinations such as Saudi Arabia, Paris, and Canada, which are vital to the airline’s operational viability. The assurances regarding the potential lifting of the EU ban and the future growth of the fleet are critical components of the final privatisation agreement and will likely influence bidder sentiment moving forward.
privatisationThe government has allocated Rs 35 billion for PIA’s current employees, alongside provisions for the pensions of approximately 16,000 retired workers, further indicating the financial considerations involved in the privatisation process. However, the ongoing delays and the need for resolution of operational challenges raise questions about the future of PIA’s privatisation. Bidders are closely monitoring these developments, with many recognising the significance of regulatory compliance and operational efficiency in determining the airline’s attractiveness as a potential investment. The landscape for PIA’s privatisation remains dynamic, with the upcoming October deadline serving as a critical juncture for all stakeholders involved.
