ISLAMABAD: Days after Finance Minister Muhammad Aurangzeb reassured the public of Pakistan International Airlines’ (PIA) privatisation within the year, bidders interested in acquiring the national carrier have now demanded full ownership, according to The News.
Initially enticed by a 60% stake offer, the six pre-qualified bidders are now seeking complete control of PIA due to concerns over fleet age, financial liabilities, and operational hurdles.
Last month, the privatisation bid was postponed until October 31, following an extension to October 1. The Privatisation Commission recently announced plans to sell 76% of PIA’s shares, though bidders claim they have not been officially notified.
Bidders argue that without 100% ownership, the risks outweigh the potential rewards, citing the financial burden of overhauling PIA’s ageing fleet. The airline’s planned retirement of 18 wide-body aircraft over the next two years, combined with the challenge of rebuilding operations from scratch, has led bidders to hesitate at the government’s $500 million investment requirement.
“Without full management and profit-loss control, we cannot justify these investments,” bidders stated.
PIA’s approximately Rs200 billion in liabilities further complicate the situation. Potential buyers would need to secure bank loans, which they argue is unfeasible without full ownership. The suspension of PIA’s operations on international routes, particularly to Europe and the United States, adds to bidders’ concerns about turning the airline into a profitable venture.
The divestment plan, designed by financial advisor Ernst & Young, has also come under scrutiny. Appointed in November last year, Ernst & Young is responsible for preparing PIA for sale, but bidders have expressed reservations about the plan’s feasibility.
Pakistan’s open skies policy, which allows international carriers to operate freely within the country, presents another challenge for potential buyers. Bidders fear that without protections from foreign competition, PIA’s potential for recovery is limited.
Concerns about workforce retention and tax obligations have also been raised. Bidders are wary of inheriting PIA’s substantial workforce and the legal protections afforded to employees. They are pressing for clarity, stating that the airline is overstaffed and questioning the government’s demand to retain employees and their pensions for at least three years.
Last week, Secretary of the Privatisation Commission Usman Bajwa confirmed that bidders are seeking more information on these issues, especially regarding pensions and protection from longstanding litigation.
Originally slated for October 1, the financial bidding process has been postponed to October 31. With many uncertainties still looming, the path forward for PIA’s privatisation remains fraught.
The Senate Standing Committee on Privatisation warned that delays in the airline’s sale could impact other privatisation efforts, including the planned divestment of Pakistan’s electricity distribution companies.
For now, the fate of Pakistan’s national carrier hangs in the balance as the government and bidders grapple with a deal that could reshape the country’s aviation industry — or see PIA grounded for good.
