No takers for Pakistan's flagship airline? Asim Munir-backed firm exits race at last minute, only 3 bidders remain

Loss-making struggling Pakistani national carrier - Pakistan International Airlines (PIA) - faced another setback in its long-pending privatisation bid as army chief Asim Munir-backed firm exited the race to acquire the airline.

According to a report in Dawn, only three bidders now remain in the race to acquire PIA: Lucky Cement Limited, Hub Power Holdings Lim­ited, Kohat Cement Com­pany Limited, and Metro Ventures (Private) Limi­ted; a consortium comprising Arif Habib Corporation Limited, Fatima Fertiliser Company Limited, City Schools (Private) Limited, and Lake City Holdings (Private) Limited; and Air Blue (Private) Ltd.

The auction is set to take place on December 23 as the government seeks of offload the struggling airline under Pakistan's $7 billion International Monetary Fund (IMF) bailout plan.

Muhammad Ali, chairman of the Privatisation Commission, said that Fauji Fertiliser Company Ltd had decided to quit the bidding process for PIA. Fauji Fertiliser Company Ltd is owned by Fauji Foundation, which is overseen by the Pakistani armed forces.

The company that emerges with the winning bid will own 75% stake in PIA. Out of this 75%, 92.5% will go to PIA while about 7.5% will go to the Pakistani government. The government will continue to hold 25% of the stake in PIA. The bidder will also get an option to acquire this remaining 25% after the payment or may choose to leave it with the state.

Struggles to sell PIA

The Pakistani government has been struggling to sell its stake in PIA for long, with the aviation industry in the country struggling due to mounting debt and operational troubles. According to a Dawn report, Pakistan has the lowest contribution of the aviation industry to GDP.

Its aviation sector constitutes just about 1.3% of the GDP.

Earlier, the bidders wanted a minimum of 75% shareholding for ease of decision making, while some sought 100%.

Ali said that some of the bidders wanted to make the payment for the 75% stake over one year but the government refused the proposal.

Pakistan attempted to sell the loss-making carrier last year as well but attracted limited interest with only one company submitting a bid. The bid was well below the the government’s $300 million threshold.

To boost investor appetite, authorities have since reduced PIA’s debt, exempted new aircraft purchases from sales tax, and offered protection against certain tax and litigation claims.