ISLAMABAD: The bidding process for auction of the Pakistan International Airlines (PIA) has been delayed by 30 days, Pakistan’s Deputy Prime Minister Ishaq Dar said on Monday, as potential bidders seek more time and information to assess the airline.
The Pakistani government last week delayed the auction of the national flag carrier for the third time. Successive governments have steered away from the PIA’s disposal as it is likely to be highly unpopular, but progress on privatization is a precondition for cash-strapped Pakistan for an International Monetary Fund (IMF) bailout approved last week.
Pakistan plans to sell more than 51 percent of its stake in the loss-making airline as part of the economic reforms suggested by the IMF which approved a long-awaited, 37-month $7 billion bailout deal on Wednesday that will require “sound policies and reforms” to strengthen macroeconomic stability and address structural challenges alongside “continued strong financial support from Pakistan’s development and bilateral partners.”
Speaking on ARY News show ‘Khabar,’ Dar said all the bidders, who showed interest in buying the airline, had requested the government for more time through a transaction adviser handling the PIA’s auction.
“He [transaction adviser] approached the government last week, that was the last day to sign off the preconditions, so that bid bond could be submitted the next day... so he said all, barring one, are saying that ‘we need more time’,” said Dar, who also heads the cabinet committee on privatization.
“God willing,” the deputy PM replied, when the anchor specifically asked if these were the final 30 days.
The Pakistani government announced in June it had selected six companies qualified to bid for PIA out of a pool of eight after receiving expressions of interest. The initial plan was to finalize the deal to sell PIA on the country’s Independence Day, Aug. 14, but the plan was delayed following requests from bidders who were waiting for the airline’s latest audited accounts, aircraft lease agreements and clarity on flights to Europe, which are currently banned.
This was followed by September and October dates for the auction, but those have also not materialized.
Dr. Ahsan Ishaq, a spokesperson for privatization ministry, last week told Arab News that the PIA’s cumulative losses alone had surpassed Rs800 billion ($2.86 billion), with the total asset valuation of the airline standing at approximately Rs160 billion ($572 million).
In August, the country’s central bank refused to grant a waiver or exemption to prospective buyers regarding PIA’s commercial bank loans of Rs268 billion ($971.1 million) and other financial guarantees in dollar terms, a development viewed as a setback to the privatization bid.
With a fleet of 34 aircraft comprising 17 Airbus A320s, 12 Boeing B777s and 5 ATRs, the airline loses traffic to Middle Eastern carriers, who have a market share of 60 percent, because of an absence of direct flights to destinations. The carrier has air service pacts with 87 countries, and landing slots at key destinations such as London Heathrow.
The re-organization plan of the business will separate the aviation-related aspects from non-core components, so freeing the operating subsidiary of a large portion of legacy debt.