The Pakistani government will sell a 75% stake in PIA - Pakistan International Airlines (PK, Islamabad International) with the successful buyer having to invest at least USD500 million over three years to recapitalise and revitalise the carrier, according to an August 29 briefing to the Senate Standing Committee on Privatisation.
The secretary of the committee, Usman Akhtar Bajwa, said there would be no more time extensions, with the winning bidder announced and preliminary sale documentation to be signed in October. As previously reported in ch-aviation, the government is attempting to sell a majority stake in the state-owned carrier as well as whole or partial stakes in a raft of other state-owned entities.
Earlier this year, government agencies conducted a pre-qualification process for parties that had responded to an expression of interest campaign. Six parties passed muster - Fly Jinnah (9P, Karachi International), AirBlue (PA, Karachi International), Arif Habib Corporation Limited, and three consortia led by YB Holdings (Private) Limited, Pak Ethanol, and Blue World City.
AsiaPak Investments Limited (Hong Kong), Swiss Aviation Group (Switzerland), Airport Competence (Austria), Pearl Asset Management (Australia), and Capital A Consultancy (Malaysia) are believed to be among the members of the Pak Ethanol consortium. The YB Holdings consortium reportedly includes AirSial (PF, Karachi International), Serene Air (ER, Islamabad International), and Liberty Daharki Power Limited.
While the government has transferred approximately PKR623 billion (USD2.23 billion) of liabilities off PIA's balance sheet and into a separate company, the buyer will assume responsibility for around PKR220 billion (USD789 million) in liabilities and be required to inject PKR80 billion USD287 million) in the first twelve months, representing over half of the USD500 million required to be invested over the first three years.
According to the ch-aviation PRO airlines module, PIA flies to 32 destinations in 12 countries with a fleet of 32 aircraft - seventeen A320-200s, three ATR42-500s, six B777-200ERs, two B777-200LRs, and four B777-300ERs. However, 16 are out of service for various reasons, including all three B777-200ERs and ten of the seventeen A320s. Among other things, the new majority owner of PIA is expected to invest heavily in new aircraft.
