(Dec 24): A consortium bid 135 billion rupees (US$482 million or $618.4 billion) for a 75% stake in Pakistan International Airlines Corp, a watershed moment in what’s been an attempt to privatise the national carrier since the 1990s.
Businessman Arif Habib’s consortium made the winning bid in a televised auction in Islamabad, topping the government’s minimum price of 100 billion rupees for one of Pakistan’s biggest privatisations. The bidding group also includes Fatima Fertilizer Co, Fauji Fertilizer Co and AKD Group.
PIA has struggled for years with operational inefficiencies, an ageing fleet, losses and political intervention, but it managed to stay afloat thanks to government bailouts. Past attempts to sell were blocked by opposing political parties and employees halting flight operations.
The privatisation is part of broader Pakistan reforms tied to a loan programme with the International Monetary Fund, including the restructuring of state-owned companies and the sale of the Roosevelt Hotel in New York.
To boost investor appetite, authorities reduced PIA’s debt, exempted new aircraft purchases from sales tax and offered protection against certain tax and litigation claims. The new terms were approved by the IMF.
Bidders’ demands included a commitment that the exemptions would remain for 15 years, privatisation adviser Mohammad Ali has said. Most of the proceeds from the sale will go to the airline, he said. The top bidder has the option to acquire the remainder of PIA at a 12% premium to its offer.
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Habib started his career in the financial markets in 1970 as a stockbroker in Karachi, before expanding his business interests into areas including asset management, fertilizers, steel and real estate.
PIA has resumed flights to the European Union and UK after bans were lifted.
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