By Staff Reporter
ISLAMABAD: A consortium led by Arif Habib Corp. submitted the top bid of Rs115 billion for a controlling stake in Pakistan International Airlines, edging out a group spearheaded by Lucky Cement Ltd. with an offer of Rs101.5 billion, as the government pushed ahead with a long-delayed effort to privatize the debt-laden flag carrier.
The bids, unveiled in a televised ceremony on Tuesday, cleared the government’s reference price of Rs100 billion, setting the stage for a second round of open auction later in the day where the lower bidder will have a chance to match or exceed the highest offer. A third contender, private carrier Air Blue (Pvt) Ltd., came in at Rs26.5 billion, well below the threshold.
The auction marks Pakistan’s second televised attempt to offload the airline after a botched process last year that attracted only one offer far short of expectations, stalling what would have been the country’s first major privatization in almost two decades. “Government’s aim is not to sell the national airline but to make it stand on its own feet,” Privatization Commission Chairman Muhammad Ali said before the bids were opened, emphasising that the sale is part of a broader reform agenda to attract investment and restore PIA’s former stature.
The first-round event, held in Islamabad saw representatives from the pre-qualified groups deposit sealed envelopes into a transparent box during a live broadcast on state television. The Arif Habib-led consortium includes Fatima Fertilizer Co., the City Schools network and Lake City Holdings Ltd., while the Lucky Cement group comprises Hub Power Holdings Ltd., Kohat Cement Co. and Metro Ventures. A notable absentee was Fauji Fertilizer Co., which had been seen as a frontrunner but formally pulled out last week.
Under the terms, the winner will acquire a 75% stake, with an option to buy the remaining 25% later or leave it with the state. Of the purchase price, 92.5% will flow directly into PIA for revival efforts, while 7.5% goes to the government. Payment is structured as two-thirds within 90 days and the balance over 12 months. The deal includes safeguards for PIA’s workforce, with 12 months of job security guaranteed. Pension liabilities, medical benefits and other post-retirement perks will shift to a holding company, while the new owners handle ongoing salaries and benefits.
PIA, which operates to 78 destinations with about 170 landing slots globally, has long been a fiscal burden but shows signs of turnaround. The government has absorbed most of its legacy debt, enabling the airline to report its first pre-tax profit in two decades. Bans imposed by Britain and the European Union five years ago, stemming from safety concerns, have been lifted, reopening lucrative routes that could boost revenue.
Last year’s auction set a minimum of Rs80 billion for a 60% stake but drew just a Rs10 billion bid from real estate developer Blue World City, which balked at raising it amid worries over the carrier’s finances and inefficiencies. Officials say the airline needs urgent capital and expert management to capitalise on these improvements. The sale is a key plank in Pakistan’s International Monetary Fund bailout program, which mandates privatizing loss-making state assets including banks and power distributors to ease budget strains and rebuild investor trust.
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