Pakistan Struggles to Fund PIA; Three Bidders Participate in Airline Auction

New Delhi: Pakistan is currently facing a severe economic crisis, so much so that the government lacks the funds to operate its state-owned airline, Pakistan International Airlines (PIA). The company has been running at a significant loss, prompting the government to auction it off on Tuesday. Three groups have placed bids in the latest attempt to privatize the carrier.

Second Attempt at Privatization
This marks Pakistan’s second attempt to sell PIA. Last year, the government tried to privatize the airline, but the effort failed when only a single bid was received—far below the reserve price. As a result, the nation’s first major airline privatization in nearly two decades did not materialize.

Stake on Sale
The government is offering 75% of PIA’s stake for sale but is willing to sell up to 100%. According to local media reports, any stake above 75% will require a 15% premium.

Bidding Groups
The three bidders include:

1. Lucky Cement-led consortium – Also comprising Hub Power Holdings Limited, Kohat Cement Company Limited, and investment firm Metro Ventures.
2. Arif Habib Corporation-led group – Including Fatima Fertilizer Company Limited, City Schools (private school network), and Lake City Holdings Limited (real estate firm).
3. Private airline Air Blue (Private) Limited.

Transparent Process
All bids were submitted in a sealed, transparent box. The Pakistani government will announce a reserve price on Wednesday, and if any bid exceeds it, the winner will be declared. Prime Minister Shehbaz Sharif expressed gratitude to his ministers and the head of the Privatization Commission for ensuring transparency and encouraged cabinet members to participate actively in this second round.

Failed Attempt Last Year
Previously, Pakistan had set a minimum price of $305 million for a 60% stake. However, only a $36 million bid was received from real estate developer Blue World City, which refused to increase its offer citing PIA’s financial condition.

IMF Connection
The sale is part of a broader privatization drive under Pakistan’s IMF bailout package, which includes selling stakes in state-owned banks, power distribution companies, and other loss-making enterprises. The goal is to reduce fiscal deficits and restore investor confidence.

Company Losses
PIA was delisted from the Pakistan Stock Exchange. In 2022, the airline posted a loss of $437,000, with revenue of only $854,000, underscoring its persistent financial struggles. Under a $7 billion loan agreement with the IMF, Pakistan must privatize several loss-making state-owned companies by 2029, including firms in finance, energy, industry, and retail, many of which have suffered billions in losses due to mismanagement and corruption.