The bidding for shares in PIA (Pakistan International Airlines, PK, Islamabad International Airport) is expected to be held in the first week of August after six companies and/or consortiums were pre-qualified.
The companies eligible to bid are AirBlue (PA, Karachi International Airport), Arif Habib Corporation, Blue World City, Fly Jinnah (9P, Karachi International Airport), Pakistan Ethanol Consortium and YB Holdings Consortium, which is reportedly inspecting PIA’s assets and infrastructure this month. Two other potential bidders, Sardar Ashraf D. Baloch Builders and Jerry’s International, were ruled out – Jerry’s because of its financial position, or lack thereof, and Sardar because of concerns about an unidentified partner of Chinese nationality.
The Pakistani government owns about 96% of PIA and plans to sell at least 51% plus a controlling stake to the private sector. Islamabad had hoped that a foreign operator, such as a Gulf-based airline or a regional sovereign wealth fund, would swoop in and take control. But potential foreign buyers have shied away, leaving domestic companies and consortia as pre-qualified bidders. The Privatization Commission is expected to decide the exact number of shares the government will sell (between 51% and 100%) as the sale process nears its end.
The entire privatization is expected to take up to five years and is being divided into three phases: the first will take one year to complete, the second one to three years, and the third three to five years. Federal Minister for Privatization Abdul Aleem Khan recently told local media that delays in the process so far have cost the national exchequer 850 billion Pakistani rupees (US$3.05 billion), but did not provide any data to back up his claim.
The sale of PIA has been further complicated by the European Commission’s continued airspace and airport ban on Pakistani airlines. PIA had hoped it would be lifted and had planned to return to Paris CDG and London Heathrow. PIA says the ban has cost it around 40 billion Pakistani rupees ($144 million) in lost revenue annually. Government officials reportedly met with bidders this week to answer questions about the flight ban and its impact on the privatization process and PIA’s value.
