PIA stake sale: Pakistan’s national airline gets only one bidder

Pakistan International Airlines (PIA) received only one final bid from the real estate group Blue World City to acquire a majority stake in the national carrier, reported Bloomberg on Friday, November 1.
The deal for the carrier failed several times in the past, as per the report. 
The realty firm Blue World City was the only one to submit a final bid of ₹1,000 crore ( ₹10 billion), where the minimum expected price was ₹8,500 crore ( ₹85 billion), reported the agency citing the bidding process announced by the Privatisation Commission in Islamabad on Thursday.
The Pakistan government is now in discussion with the real estate group seeking an opportunity to revise the offer to the minimum price. Blue World is one of the six bidders shortlisted by Pakistan authorities, but the other five groups decided to back off, as per the report.
The government is trying to support the nation’s debt-ridden economy by selling loss-making state-owned entities, including Pakistan International Airlines, Roosevelt Hotel in New York and energy utility companies. Shehbaz Sharif’s government has also failed to privatise the airline in previous attempts because of labour unions and political party protests. 
PIA’s shares rose 3.9 per cent after the initial bid was submitted at 1:30 pm (local time), before it fell near the end of the trading session to close 5.46 per cent lower, according to the news agency.
The winning bidder of the PIA deal needs to invest $500 million in five years into the loss-making airlines, reported the agency. The PIA has not made any profits in nearly 20 years and had to scale back operations in May last year after running short of funds to pay for fuel. The airline was able to operate through regular bailout from the government.
Blue World plans to lease aircraft to revive the airline, Saad Nazir, its chairman, told the media after submitting the bid. The group plans to bring in Chinese and Turkish investors who have expertise in the industry, Nazir was quoted as saying earlier this week.
The real estate group bid for a 60 per cent stake in the airline while the government decided to keep the remaining stake. 
The five groups that did not bid were Arif Habib’s company, Lucky’s YB Holdings Pvt, Air Arabia’s Fly Jinnah, domestic airline Airblue, and Pak Ethanol Pvt, as per the agency report.
The national carrier has been banned from operating flights to the European Union since 2020 due to concerns over fake pilot licences. “The European routes are essential to move the business forward, and we are hopeful of a resolution,” Amir Mahmood, financial advisor to Blue World City, told reporters in Islamabad, as per the agency.
Pakistan moved about three-fourths of the airline’s total debt of ₹83,000 crore ($3 billion) to government books for the sale to happen.