Pakistan Demands Fair Offers for Pakistan International Airlines Sale
Pakistan’s Privatisation Minister, Abdul Aleem Khan, has emphasized the need for “respectable” offers in the privatisation of Pakistan International Airlines (PIA), rejecting the single bid received in an October 31 auction as far below the government’s expectations. Speaking in Islamabad on November 3, Khan confirmed that while the government remains committed to selling PIA, it will not do so at a steep discount. The sole bid of PKR10 billion (USD36 million) fell significantly short of the reserve price of PKR85.03 billion (USD306 million), prompting Khan to stress the importance of securing fair value for the airline, reported ch-aviation.com.
The only bid for PIA came from Saad Nazir, chairman of Blue World City, who defended his offer, stating that the current valuation reflects PIA’s financial condition and significant operational challenges. Nazir suggested that, if the government does not accept his offer, he may explore launching his own airline, asserting, “If the government does not privatise PIA, we wish them the best. We will start our own airline.”
Following the auction, interest from local government bodies emerged. The Khyber Pakhtunkhwa provincial government submitted an expression of interest to acquire PIA, and there are unconfirmed reports suggesting possible interest from the Punjab government as well. Khan acknowledged the potential involvement of provincial governments, provided they meet the minimum sale requirements.
The privatisation process faced scrutiny, with Pakistan’s Dawn newspaper noting that insiders had not viewed Blue World City’s bid as a serious offer. However, Blue World was the only one of six shortlisted companies to provide the earnest money required before participating in the auction. The privatisation process has been fraught with challenges, as PIA’s financial situation has dissuaded potential investors.
Khan elaborated that much of PIA’s privatisation framework, including certain financial adjustments, had been established prior to his administration. In an effort to make the airline more appealing to buyers, approximately PKR600 billion (USD2.16 billion) of PIA’s debt had been transferred to a separate holding company, reducing the airline’s liabilities on its books to around PKR230 billion (USD827.8 million). This restructuring was intended to improve PIA’s financial standing and attractiveness to investors.
Given the unsuccessful auction, Khan revealed that one option under consideration is to further offload PIA’s remaining liabilities, potentially relaunching the privatisation process with a “clean PIA” to attract more competitive offers. By creating a more financially stable PIA, Khan hopes to generate bids closer to the government’s valuation.
The privatisation of PIA comes as part of Pakistan’s broader economic reform initiatives aimed at reducing state-owned enterprises’ financial burdens on the government. PIA, which has faced substantial operational and financial difficulties, has struggled to compete effectively in the region’s highly competitive aviation market. The airline’s privatisation is viewed as a necessary step toward restructuring Pakistan’s aviation sector and relieving government resources.
As Pakistan’s government weighs its options, the goal remains to secure a fair market value for PIA while ensuring a stable future for the national carrier. The privatisation ministry is expected to continue discussions with potential buyers and may consider further measures to enhance the airline’s appeal as it aims to relaunch the privatisation process in the near future.
Related news: https://airguide.info/?s=Pakistan+Airlines
Sources: AirGuide Business airguide.info, bing.com, ch-aviation.com