The Arif Habib-led consortium makes the highest bid of Rs 121 billion

• Three bids received for national carrier in televised auction.
• The auction follows last year’s failed attempt due to low bidding.
• PIA’s prospects improve with debt relief, bans lifted.
  

The consortium led by Arif Habib Corporation Limited submitted the highest bid of Rs 121 billion, followed by the consortium of Lucky Cement Limited with Rs 120.25 billion in the second round of bidding process for Pakistan International Airlines (PIA).

An official of the Privatization Commission opened the bids in the country’s second televised attempt to privatize the national airliner.

Speaking ahead of the open auction, Privatization Commission chairman Muhammad Ali said the privatization of the national carrier was part of the government’s reform agenda.

“The government’s aim is not to sell the national airline but to get it back on its feet,” he added.

Ali said the privatization of PIA will bring investment to the country, adding that the government wants to revive the airline’s former glory.

He said the government had decided to privatize between 51% and 100% of the national airline’s shares, adding that some bidders had expressed interest in acquiring a 75% stake.

Ali said the government eventually decided to sell 75% of the airline’s shares. He said 92.5% of the amount raised through the bidding process will be spent on improving the national airline while the rest will go to the government.

He further explained that bidders will be allowed to make payments in phases, with two-thirds of the amount paid upfront and the remaining one-third at a later stage.

The consultant added that bidders also have the option to include up to two additional lots after the bidding process is complete.

The first round of the open bidding ceremony for the privatization of Pakistan International Airlines (PIA) was held in Islamabad, with three bidders vying for a majority stake in the national carrier.

Since two bids exceeded the government’s benchmark price of Rs 100 billion, the successful bidder will now be determined through an open auction.

The next round will give the lowest bidder the opportunity to match or raise their bid above the highest bid.

The bidders included a consortium led by Lucky Cement Limited, comprising power producer Hub Power Holdings Limited, Kohat Cement Company Limited KOHC and investment firm Metro Ventures.

A second consortium was led by Arif Habib Corporation Limited, consisting of fertilizer producer Fatima Fertilizer Company Limited, private school network City Schools and real estate company Lake City Holdings Limited. A third bidder was the private airline Air Blue (Private) Ltd.

The auction is Pakistan’s second televised attempt to sell the once storied carrier after a difficult process last year that drew only a single bid that fell well below the government’s reference price, derailing what would have been Pakistan’s first major privatization in nearly two decades.

Bids were opened in a ceremony that began at 4:30 p.m. presence of the contestants.

Bid team representatives entered one by one on Tuesday to deposit sealed bids in a transparent box during the live broadcast, briefly fumbling as they pushed envelopes through the slot in a public ceremony broadcast on state television.

The bids for the majority stake in PIA are planned in two phases. A second open bid ceremony is planned for later in the day, officials said.

“I am grateful to the ministers and the head of the Privatization Commission for the transparency of the process,” said Prime Minister Shehbaz Sharif, inviting cabinet members to attend the second ceremony.

Meanwhile, Fauji Fertilizer Company Ltd, which was earlier seen as a leading contender for a 75% stake in Pakistan International Airlines (PIA), had last week formally withdrawn from the privatization bid.

Of the amount paid for the 75% stake, 92.5% will be invested in PIA, while 7.5% will go to the public. The remaining 25% stake held by the government is considered valuable and bidders will have the option of acquiring it later or leaving it with the state.

Officials said the structure was designed to accommodate bidders interested in either 75 percent or full ownership. Those who do not participate in the tender cannot later join the winning consortium, a restriction that no longer applies to Fauji Fertilizer now that it has officially withdrawn.

According to the payment terms, the winning bidder must pay two-thirds of the bid amount within 90 days, while the remaining one-third can be paid within 12 months.

The government has ensured 12 months job security for PIA employees. Pension obligations, medical benefits and other post-retirement benefits will be handled by the holding company, while ongoing salaries and benefits will be paid by the new owners.

PIA currently has rights to 78 destinations and holds about 170 landing slots worldwide. Officials said the airline urgently needed new investment and professional management to turn around its operations.

Last year, the government set a minimum price of $305 million for a 60% stake, but received an offer of $36 million from property developer Blue World City, which declined to raise its bid, citing concerns about PIA’s finances and “significant leaks.”

PIA’s prospects have improved since then. Islamabad has assumed most of the airline’s legacy debt, the carrier posted its first pre-tax profit in two decades and Britain and the European Union lifted a five-year ban that had cut PIA off its most lucrative routes.

Reopening those routes could substantially boost revenue and support a higher valuation than in last year’s failed auction, analysts and government officials said.

The sale of the airline is part of a broader privatization push under Pakistan’s IMF bailout package, which also includes plans to offload stakes in state-owned banks, power distribution companies and other loss-making businesses, as the government tries to curb fiscal leakage and restore investor confidence.