Pakistan's federal government has outlined a framework for privatising PIA - Pakistan International Airlines (PK, Islamabad International) involving the division of its assets and liabilities while postponing the auction of the ailing airline by two months to the end of September after potential bidders sought more information to evaluate the airline, according to media reports.
In particular, the bidders are awaiting updates on the airline's latest audited accounts, details about banned flights to Europe, and aircraft leasing agreements, Bloomberg reported.
The Privatisation Commission Amendment Bill 2023 was passed by a majority vote in the National Assembly Standing Committee on Privatisation on July 22, to be enacted within 240 days, reported Karachi-based Jasarat news site. During the session, Minister for Privatisation Abdul Aleem Khan supported an early sale of PIA, noting that this could prevent a further loss of PKR100 billion rupees (USD359 million). He highlighted PIA's annual losses of PKR80 billion (USD287 million) to PKR100 billion, with total losses at PKR830 billion (USD2.9 billion). Khan pledged a transparent bidding process, noting the need for USD40 million to USD50 million to revitalise the airline.
The sale of 51% to 100% of the airline, which has not been profitable for nearly 20 years, forms part of Pakistan's economic reforms agreed with the International Monetary Fund. In June, six bidders were selected, including a consortium led by the Yunus Brothers Group, the businessman Arif Habib, AirBlue (PA, Karachi International), Blue World City, Fly Jinnah, and Pak Ethanol.
According to Pakistan's Express Tribune, the government has disclosed a privatisation plan that will see PIA's assets valued at PKR171.43 billion rupees (USD616 million) divided between the holding company and the new owners. Post-privatisation, PKR146.57 billion (USD526 million) of these assets will go to the new owners, while PKR24.86 billion (USD89.6 million) will remain with the holding company. The airline's PKR830 billion deficit will be split, with PKR202 billion (USD725 million) attributed to PIA and PKR628 billion (USD2.2 billion) to the holding company, leaving the new PIA with a PKR55.70 billion (USD200 million) deficit.
Assets such as aircraft, technical equipment, and various properties, valued at PKR92.62 billion (USD332.8 million), will be transferred to the new PIA owners, along with long-term deposits and other receivables. The owners will inherit liabilities including long-term financing, aircraft leases, employee salaries, and trade payables, totalling PKR194 billion (USD697 million).
The holding company will assume PKR628 billion (USD2.2 billion) in losses and liabilities such as long-term investments, loans, and outstanding payments to the government and commercial banks.
