PIA Stake Sale Delayed Due to Bidder Concerns and Conditions
The sale of a majority stake in Pakistan International Airlines (PIA) has been delayed due to conditions set by the shortlisted bidders. Originally planned for October 1, the auction deadline was pushed back to October 31, following requests for additional time and concerns over job security and financial guarantees.
At an October 2 briefing to the Senate Standing Committee on Privatization, government officials cited bidder requests for more due diligence. However, Privatisation Commission Secretary Usman Bajwa revealed that one of the main sticking points is the government’s requirement for the buyer to retain PIA’s 7,300+ employees for at least two years and comply fully with the country’s benefits and pensions system during that time. Several bidders argue that the airline is overstaffed and needs to reduce its workforce, contributing to the delay in finalising the sale.
The six shortlisted bidders include Fly Jinnah, AirBlue, Arif Habib Corporation Limited, and consortia led by YB Holdings, Pak Ethanol, and Blue World City. Each bidder is now negotiating terms, including a potential warranty period for PIA’s aircraft and protection from ongoing litigation. Specifically, they are requesting a one-year warranty for 18 of PIA’s aircraft to ensure they are in proper condition and that maintenance records are accurate.
Currently, PIA’s fleet consists of 32 aircraft, but only half are operational, including ten A320-200s, one ATR42-500, and five Boeing 777s. The remaining aircraft are grounded, posing another challenge for potential buyers.
Additionally, bidders are divided on the stake they wish to acquire, with some seeking to purchase 65% while others want full ownership of PIA. The latter group argues that full control is necessary to justify the risks, especially as the new owner will need to invest USD 500 million in PIA over three years. Moreover, they are seeking guarantees from the government to cover outstanding tax liabilities before proceeding with the acquisition.
The sale of PIA comes amid mounting losses for the airline, driven by bans on flights to the European Union and the UK. Competition from foreign airlines has further eroded PIA’s market share, and restructuring plans have failed to materialise, compounding the financial strain. Despite these challenges, Bajwa remains confident that the auction will take place by the end of October.
The ongoing delays reflect the complexities of privatising PIA, which remains Pakistan’s largest loss-making state-owned enterprise. As negotiations continue, the government must address bidder concerns regarding employment, aircraft warranties, and financial liabilities to finalise the sale.
Sources: AirGuide Business airguide.info, bing.com, ch-aviation.com