Only one bidder remains as PIA privatization nears auction deadline

• Just one day left in the deadline for the PIA privatization tender.
• Concerns are emerging about possible delays in the PIA sale.
• Privatization of PIA is a priority under the IMF program.
  

ISLAMABAD: Only one consortium has submitted pre-qualification documents for the privatization of Pakistan International Airlines (PIA) even as the bidding deadline approaches.

With just one day left in the deadline, concerns about possible delays in the sale, sources familiar with the situation said.

The Privatization Commission has been gearing up for the auction, set for October 31, by calling the media and key stakeholders and advising PIA officials to remain on alert.

Initially, the deadline was extended to October 31 following a request from the International Monetary Fund (IMF) for completion by the end of September.

The IMF has made the privatization of state-owned enterprises like PIA a priority under its new loan program, which emphasizes economic reforms aimed at fiscal stability.

Of the six teams that qualified for the bid, five withdrew, leaving only one bidder. The group reportedly filed the required “correct money” with the Privatization Commission on Tuesday, confirming its intention to participate.

Among the defaulters were private airline Airblue Ltd, Arif Habib Corporation Ltd, Fly Jinnah by Air Arabia, YB Holdings Pvt, Pak Ethanol Pvt and real estate consortium Blue World City.

Earlier this month, the default bidders, who initially agreed to a 60% stake, pushed for full ownership of PIA, citing significant risks associated with limited control.

In response, the government increased the bid to 76%, but bidders raised further concerns about the airline’s financial burdens, aging fleet and operational challenges.

The remaining bidders have demanded 100% ownership, arguing that significant investment — estimated at $500 million — will be required to modernize PIA’s fleet, especially given the impending retirement of 18 wide-body aircraft within two years.

The airline’s debt of about Rs 200 billion and the requirement for bank financing add to the hesitancy of bidders, along with the complexity of securing insurance.

PIA’s current fleet of leased smaller aircraft would require significant investment in fleet renewal and operations if acquired, with the discontinuation of international routes to Europe and the US further affecting appeal.

Prospective buyers urged the government to restore these routes to improve the airline’s profitability prospects.

Another challenge is Pakistan’s “open skies” policy, which allows foreign carriers to operate freely in the country.

Bidders have expressed concerns that without restrictions on foreign competition, PIA’s recovery prospects could remain limited.

In addition, bidders have raised issues of workforce retention, noting that PIA staff are protected by local labor laws.

The government’s requirement to retain employees, along with their pension plans, for at least three years has also raised concerns. Prospective buyers argue that the airline is overstaffed, adding extra burden to future carriers.