Two prominent Pakistani business groups, along with a company backed by the powerful military, are preparing bids to acquire Pakistan International Airlines (PIA). The government views this divestment as a key step toward revitalizing its long-stalled privatization program for state-owned enterprises.
First Significant Privatization in Nearly Two Decades
The sale of PIA marks the first major privatization attempt in almost 20 years. It also aligns with the conditions attached to Pakistan’s $7 billion bailout from the International Monetary Fund (IMF) last year, which requires the government to sell loss-making state assets.
Previous Attempt to Sell PIA Failed
Last year, the government’s effort to privatize part of PIA failed. The sale was seen as a heavy financial burden and stalled due to the airline’s poor performance and strict takeover conditions. The sole bid of $36 million was far below the reserve price of $305 million, leading to the deal falling apart.
New Bidding Process Gains Momentum
Expressions of interest for up to 100% ownership of PIA will close on Thursday. Industry insiders expect additional bidders to join, encouraged by recent tax incentives and improvements in the airline’s financial health.
Potential Bidders Include Major Business Groups and Military-Linked Company
Sources indicate that the Yunus Brothers Group, owners of Lucky Cement and Energy, and a consortium led by Arif Habib Ltd, which includes Fatima Fertilizers, Lake City, and The City School, are among the bidders. Fauji Fertilizer Company, partly owned by the military and a significant player in Pakistan’s fertilizer industry, has also announced its intention to bid.
PIA Employees Plan to Submit a Bid
A group of PIA employees is organizing a bid to save jobs and help turn the airline around. “Employees will use provident funds and pensions and look for investors to bid. We are doing this to save jobs and turn the company around,” said Hidayatullah Khan, chairman of the airline’s senior employees’ association.
Restructuring Efforts to Attract Investors
PIA restructured last year, offloading about 80% of its legacy debt to the government to make the airline more attractive to buyers. However, concerns remain about overstaffing and the prospect of layoffs, which continue to worry potential investors.
Government Must Decide on Full Divestment
Industry experts say the success of this privatization depends heavily on whether the government is willing to relinquish 100% ownership. In contrast to last year’s failed sale, the government has now removed the requirement for upfront sales tax payments when leasing new aircraft—a hurdle that had previously discouraged bidders.
PIA’s Improving Outlook and International Expansion
PIA posted its first operating profit in 21 years last year, driven by cost-cutting reforms, after suffering losses totaling $2.5 billion. The airline resumed flights to Europe in January following the lifting of a four-year EU security ban. It has also applied for permission to restart flights to London and Manchester.
Future Growth Hinges on International Routes and Partnerships
Restoring international routes is seen as vital for PIA’s future growth. The winning bidder may seek partnerships with foreign airlines to operate these routes and enhance the airline’s competitive position.
