PIA bidding is anticipated to end in a month
KARACHI: Conditions have been placed on the prospective purchaser of the state-owned Pakistan International Airlines (PIA) by the government. These include prohibiting the investor from selling the business within the first three years of the transaction and mandating that 20 aircraft be added to the fleet.
In an interview with The Express Tribune, Arif Habib, the chairman of Arif Habib Corporation, one of the pre-qualified bidders for the airline, stated that the buyer would not be able to resell the airline for at least three years according to the government’s business plan following PIA’s privatisation.
Habib had earlier told a group of journalists that the new buyer would add at least 20 aircraft to PIA’s fleet during a discussion of the business plan.
The airline currently operates 34 long- and short-haul aircraft in its fleet. Twenty aircraft are owned by PIA; the other eight were obtained through dry leasing. In addition, there are 10,323 personnel employed by the airline, or 304 workers for every aircraft.
According to his projection, the prospective bidder would like to acquire a 75% interest in PIA in order to obtain majority control over the airline.
Habib, who is in charge of the group of businesses that manufacture steel, cement, and fertiliser, expressed optimism that the PIA bidding process will be finished by October 1, 2024, in less than a month.
He emphasised that PIA’s debt and interest payments had previously been its main problem. About Rs600 billion of the Rs800 billion overall debt has been recorded on the balance sheet of a recently established holding company; the remaining Rs200 billion will be repaid by the buyer.
He emphasised that PIA’s debt and interest payments had previously been its main problem. About Rs600 billion of the Rs800 billion overall debt has been recorded on the balance sheet of a recently established holding company; the remaining Rs200 billion will be repaid by the buyer.
Habib noted that the Federal Board of Revenue (FBR) and the Civil Aviation Authority (CAA) accounted for the majority of PIA’s debt. “Giving the customer a fair amount of time to pay back the debt is essential. Immediate payback requirements could have a negative impact on the cost.”
He stated that the terms for the potential bidders to repay a debt of Rs. 200 billion had not yet been proposed by the government.
He pointed out that prospective purchasers may become cautious due to concerns that the switch could be switched off at any time due to the outstanding debt issue. Institutions consistently allowed for some wiggle room when the airline was governed by the government.
Although PIA was operationally viable, Habib stated that the airline could soon generate a profit if the debt and employee-related difficulties were rectified following the takeover.
Recently, he proposed that rather than putting the privatisation proceeds to other uses, the government should use them to fund the national flag airline. “This will fix the airline’s issues soon and help make profit in future.
The Ministry of Aviation informed the National Assembly Standing Committee on Aviation in July of PIA’s financial performance, noting that the airline reported an operational profit of Rs3.187 billion for the January–December 2023 period. The Ministry also disclosed that the airline’s net loss for the same period was Rs103.90 billion.
The committee discussed the operation of the Aviation Division and its related departments in addition to PIA’s losses and liabilities, of which Rs628.5 billion had already been transferred to PIA Holding Company to expedite the privatisation process.