Pakistan govt likely to reject Blue World City consortium's bid for PIA stake

Pakistan’s Privatisation Commission is set to reject the PKR 10 billion bid for a 60 percent stake in Pakistan International Airlines (PIA) from Blue World City.

Blue World City, the only bidder to make it to the last step, was given a 30-minute period to re-evaluate the bids for the national flag carrier, but they chose to stick to the price originally offered.

The government had set the floor price for PIA at PKR 85 billion. The airline’s assets are valued at PKR 152 billion.

The bid will now go to the Privatisation Commission and the Cabinet Committee on Privatisation for final evaluation. However, sources privy to the matter said it’s unlikely to be approved.

The Cabinet Committee on Privatization has approved the reference price as recommended by the Privatization Commission to sell a 60% stake in PIA Corporation.

The decision was made during a meeting attended by Deputy Prime Minister Ishaq Dar and other senior officials from various ministries via Zoom from Doha.

The bid involves the acquisition of operational assets and the airline function, while the government will retain other assets, including the Roosevelt Hotel in New York, which it plans to sell separately.

The consortium, which includes Blue World Aviation Limited, Blue World City, and Iris Communication, is the only group to have bid for PIA. Earlier, the government had shortlisted several other potential bidders, but none submitted offers.

The Privatization Commission has already agreed on key terms with the consortium. PIA employees will retain their jobs for 18 months, after which around 70% will receive new job offers.

The investment company plans to invest $300 million over the next five years, increasing PIA's fleet to 45 aircraft and restoring services on all routes. Final approval for PIA's bidding will be sought from the federal cabinet.

The bidding for PIA, initially scheduled for October 1, was delayed to October 31. However, unresolved issues may require more time.

This is not the first privatization attempt for PIA, with previous efforts failing due to protests from labor unions and political opposition.

The airline reported a loss of over PKR 76 billion in the first nine months of 2023, with total liabilities at PKR 831 billion and total assets valued at PKR 152 billion.