Govt delays PIA privatisation bidding by a month

ISLAMABAD: The government has postponed financial bidding for the privatization of Pakistan International Airlines (PIA) by a month, moving the date from October 1 to October 31, 2024. Sources attribute the delay to low bidder interest and material unresolved disconnects, including unresolved court cases, fleet ageing and civil aviation issues.

Earlier this week, Usman Bajwa, Secretary of the Privatization Commission, informed the National Assembly’s Standing Committee on Privatization that the final bid documents had been shared with six pre-qualified bidders, with financial bidding initially set for October 1.

An earlier announcement by a federal minister claiming that Turkish Airlines had expressed interest in taking over PIA was swiftly refuted by Turkish Airlines through a statement to Bloomberg. Efforts to contact Jawad Paul, Secretary of the Privatization Division, for comment on the delay were unsuccessful.

In June, six consortia were pre-qualified to bid for a 60 percent stake in PIA. The bidders include Fly Jinnah Limited, Air Blue Limited, Arif Habib Corporation Limited, a consortium led by Y.B. Holdings (Private) Limited, a consortium led by Pak Ethanol, and one led by Blue World City. A significant concern for potential bidders is the ongoing European Union ban on PIA flights to Europe, historically one of the airline’s most profitable routes. PIA CEO Amir Hayat expressed optimism during a recent panel meeting, stating that an audit has been completed and the European Union Aviation Safety Agency (EASA) is expected to lift the ban by the end of the year.

Bajwa explained that the final bid documents were uploaded to the Virtual Data Room on September 18, with bidding parties now in the final stages of due diligence. He also assured the panel that PIA’s current fleet of 20 aircraft is expected to expand to 40-45 planes over the next three to five years. “We have requested the induction of new planes to reduce the fleet’s average age from 17 years to 10,” he stated.

The secretary further emphasized the importance of retaining human resources for two to three years, while safeguarding employee perks and pension entitlements for both current and retired workers. He noted that government approval would be required if bidders decide to discontinue or sell PIA routes, particularly key international routes to destinations such as Saudi Arabia, Paris and Canada.

Concerns over the EU ban were raised again, with Bajwa reiterating that the Civil Aviation Authority has made significant progress, and the ban could soon be lifted. These assurances, he confirmed, are included in the final draft of the privatization agreement.

Additionally, Rs35 billion has been earmarked for PIA’s 7,360 current employees, with the pensions for 16,000 retired workers to be covered by the government. The delay adds to growing uncertainties over PIA’s privatisation process, with bidders closely monitoring developments related to the EU ban and other operational challenges.