Only one bidder remains as PIA privatisation nears auction deadline

• Just one day left in cut-off time for PIA privatisation bidding.
• Concerns regarding potential delays in PIA sale loom emerge. 
• Privatising PIA priority made priority under IMF programme.
  

ISLAMABAD: Only one consortium has submitted prequalification documents for the privatisation of Pakistan International Airlines (PIA) despite the bidding deadline approaching. 

With just one day left in the cut-off time, concerns regarding potential delays in the sale, sources familiar with the situation have said. 

The Privatisation Commission has prepared for the auction, set for October 31, inviting media and key stakeholders and advising PIA officials to remain on standby. 

Initially, the deadline was extended to October 31 following the International Monetary Fund’s (IMF) request for completion by the end of September. 

The IMF has made privatising state-owned enterprises like PIA a priority under its new loan program, which emphasises economic reforms aimed at fiscal stability.

Of the six pre-qualified groups for the bid, five have withdrawn, leaving only one bidder. The group reportedly deposited the required "earnest money" with the Privatisation Commission on Tuesday, confirming its intent to participate. 

Among the shortlisted were private airline Airblue Ltd, Arif Habib Corporation Ltd, Fly Jinnah by Air Arabia, YB Holdings Pvt, Pak Ethanol Pvt, and the real estate consortium Blue World City.

Earlier this month, the prequalified bidders, who initially agreed to a 60% stake, pushed for complete ownership of PIA, citing substantial risks associated with limited control. 

In response, the government raised the offer to a 76% stake, but the bidders expressed further concerns over the airline’s financial burdens, aged fleet, and operational challenges.

The remaining bidders have called for a 100% ownership, arguing that significant investment — estimated at $500 million — will be necessary to modernise PIA’s fleet, especially given the impending retirement of 18 wide-body aircraft within two years. 

The airline’s approximate Rs200 billion debt and requirement for bank financing add to bidder hesitancy, along with complexities in securing insurance.

PIA’s current fleet of leased smaller aircraft would demand considerable investment in fleet renewal and operations if acquired, with halted international routes to Europe and the US further affecting appeal. 

Prospective buyers have urged the government to restore these routes to improve the airline’s profitability outlook.

Another challenge is Pakistan’s "open skies" policy, which allows foreign carriers to operate freely in the country. 

Bidders have voiced concerns that without restrictions on foreign competition, PIA’s recovery prospects could remain limited.

Additionally, bidders have raised issues around workforce retention, noting that PIA’s staff is protected under local labor laws. 

The government’s requirement to retain employees, along with their pension plans, for a minimum of three years has also drawn concerns. Prospective buyers argue the airline is overstaffed, adding a further burden on future operators.