Pakistan Government Eyes Gulf Investment in PIA After Failed Auction
The Pakistani government is reportedly seeking to sell a majority or complete stake in Pakistan International Airlines (PIA) to a Gulf government, following the collapse of a recent auction. A government-to-government (G2G) agreement is being considered, with Qatar or Abu Dhabi being potential buyers.
This move follows the rejection of a PKR10 billion (USD 36 million) bid for PIA in an October 31 auction, well below the set reserve price of PKR85 billion (USD 305.7 million). Despite the government approving six potential buyers, only one bidder, Blue World City—a local real-estate development firm—submitted a proposal. No other bidder has provided credible financial or operational plans to run PIA effectively.
In light of the failed auction, the Pakistani government is adjusting its privatization strategy. Meetings held earlier this week discussed the possibility of inviting foreign investors, specifically from Qatar and Abu Dhabi, to express interest in acquiring the airline. The government’s Strategic Investment Facilitation Council (SIFC) is overseeing this new approach, with a provisional deadline for responses set for November 30.
The Pakistani government has long sought to privatize the state-owned carrier, which has been struggling with heavy financial losses. PIA has been actively exploring partnerships with Gulf investors, particularly from the UAE, Saudi Arabia, and Qatar. Earlier this year, discussions with these Gulf nations failed to materialize, and all pre-approved bidders for the airline were local entities, though some included international participants in their consortiums.
Simultaneously, PIA is hoping to resolve its ongoing flight ban in the European Union. The EU imposed the ban in mid-2020 after the crash of a PIA A320-200 near Karachi International Airport and issues related to fake pilot licenses. In a bid to lift the restrictions, Pakistan’s Civil Aviation Authority (PCAA) has submitted a safety plan to the European Aviation Safety Committee (EASC), addressing the concerns that led to the flight ban. However, the EASC maintained the ban in May 2024 after an audit found significant issues, including deviations from safety procedures and understaffing within the PCAA.
PIA’s services to Europe were a critical revenue stream for the airline, and the ongoing ban is a significant contributor to its financial difficulties. The government’s efforts to privatize the airline, coupled with hopes of regaining access to European markets, reflect the high stakes involved in PIA’s future viability.
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Sources: AirGuide Business airguide.info, bing.com, ch-aviation.com