The government has decided to postpone the financial bidding for the privatization of Pakistan International Airlines (PIA) by one month, shifting the date from October 1 to October 31, 2024. This delay has been attributed to a lack of interest from potential bidders and several outstanding issues, including ongoing court cases, an aging aircraft fleet, and civil aviation concerns.
Earlier this week, Usman Bajwa, the Secretary of the Privatization Commission, informed the National Assembly’s Standing Committee on Privatization that final bid documents had been distributed to six pre-qualified bidders. These bidders were initially scheduled to submit their financial bids on October 1.
A recent assertion made by a federal minister claimed that Turkish Airlines had expressed interest in acquiring PIA; however, this was promptly denied by the airline in a statement to Bloomberg. Attempts to obtain comments from Jawad Paul, Secretary of the Privatization Division, regarding the delay were unsuccessful.
In June, six consortia were shortlisted to bid for a 60 percent stake in Pakistan International Airlines (PIA). The bidders consist of Fly Jinnah Limited, Air Blue Limited, Arif Habib Corporation Limited, and a consortium led by Y.B.Holdings (Private) Limited, another consortium from Pak Ethanol, and one headed by Blue World City. A major challenge facing these potential bidders is the ongoing ban imposed by the European Union on PIA flights to Europe, a route that has historically generated substantial revenue for the airline. Despite this setback, PIA’s CEO Amir Hayat recently conveyed a sense of optimism during a panel discussion, mentioning that an audit has been finalized. He anticipates that the European Union Aviation Safety Agency (EASA) will lift the ban by the end of the year.
Bajwa highlighted that final bid documents were uploaded to the Virtual Data Room on September 18, and the bidding parties are now in the concluding stages of their due diligence process. He reassured the panel that PIA’s current fleet of 20 aircraft is projected to increase to between 40 and 45 planes in the next three to five years. He further noted the request for new aircraft aimed at reducing the average fleet age from 17 years to 10 years.
The secretary also stressed the importance of retaining human resources for two to three years, ensuring that employee benefits and pension entitlements for both current and retired staff are protected. Government approval will be required if bidders opt to discontinue or sell key international routes, particularly those to destinations such as Saudi Arabia, Paris, and Canada.
The concerns surrounding the EU ban were reiterated by Bajwa, who confirmed that the Civil Aviation Authority has made considerable progress, indicating that the ban could soon be lifted. These assurances have been incorporated into the final draft of the privatization agreement. Additionally, the government has allocated Rs35 billion for PIA’s current workforce of 7,360 employees, with pensions for 16,000 retired workers also set to be covered. The postponement has heightened uncertainties regarding PIA’s privatization, with bidders closely observing developments related to the EU ban and other operational challenges.
