KARACHI- Pakistan’s government has launched a third attempt to privatise its flag carrier, Pakistan International Airlines (PIA), after two failed efforts in recent months.
The latest initiative features enhanced incentives designed to attract serious buyers, addressing concerns that deterred potential investors in previous rounds. The new bidding window remains open until June 3, 2025, with the actual auction expected between October and December of this year.
Photo: By Anna Zvereva from Tallinn, Estonia – PIA, AP-BGJ, Boeing 777-240 ER; Wikimedia CommonsPIA Attempts to Privatise
The government has significantly sweetened the deal by offering up to 100% ownership of PIA, including full management control. This represents a substantial shift in Pakistan’s approach to privatising its national airline, demonstrating increased urgency to complete the sale.
First Failed Attempt
Pakistan’s first major recent attempt to sell PIA occurred in October 2024. The effort collapsed when the government received only a single bid of approximately $36 million, dramatically below the established reserve price of $305 million.
Officials promptly rejected this offer, as it fell far short of expectations. Potential buyers had expressed serious concerns about PIA’s legacy debt burden and unresolved taxation issues, which prevented them from submitting competitive bids.
Second Failed Attempt
The second privatisation attempt also ended unsuccessfully, prompting the government to develop a new approach. Officials now plan to publish a fresh Expression of Interest (EoI) by late April 2025, with the ambitious goal of completing the entire privatisation process by December 2025.
Last year’s privatisation attempt highlighted the significant gap between government expectations and market reality. The Blue World City consortium offered just Rs 10 billion, dramatically below the Privatisation Commission’s minimum price of Rs 85.03 billion. While 6 groups had been pre-qualified for bidding, only this single real estate development company participated in the auction.
Photo- Wikipedia; Compiled by Aviation A2ZEnhanced Incentives
To attract serious buyers in this third attempt, the Pakistani government has introduced several significant incentives:
- Exemption from the 18% General Sales Tax on the lease or purchase of new aircraft
- Additional financial support to improve PIA’s balance sheet
- Protection for investors against certain tax liabilities and ongoing litigation claims
Revised Eligibility
The government has also modified the eligibility criteria for potential bidders. Existing airlines can now participate in the bidding process, provided they meet updated financial requirements. For non-airline businesses, the criteria include demonstrating a minimum annual revenue of Rs 200 billion, backed by audited financial statements from December 2023 or later.
Photo: Aero Icarus | FlickrCorporate Restructuring
Following these setbacks, the government implemented a major restructuring of PIA’s financial position. A significant portion of the airline’s legacy debt and non-aviation assets were transferred to a separate holding company.
This strategic move reduced PIA’s liabilities from Rs 864 billion to approximately Rs 190 billion, comprising Rs 148 billion in operational liabilities and Rs 36 billion in employee-related obligations. The newly formed PIA Holding Company Limited now manages non-core assets valued at Rs 20 billion.
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Pakistan Int’l Airlines Privatization Timeline Extended to December 2025
The post Pakistan Makes 3rd Attempt to Privatize National Airlines appeared first on Aviation A2Z.
