Pakistan: National airline PIA sold to private consortium; Rs 135 billion deal sealed
It aims to revive the once-prestigious carrier that had been struggling due to years of mismanagement, as reported by PTI.There were three companies bidding for this auction, namely Arif Habib, Lucky Cement, and Airblue.
Arif Habib won this auction after an aggressive bidding process against Lucky Cement.
The successful auction cost of Rs 135 billion was much higher than the government’s reference price of Rs 100 billion.
Airblue has quoted the lowest amount, Rs 26.5 billion.The sale will involve 75% of the shares of PIA at this stage, and the successful bidder will have 90 days to buy the rest 25%.
A greater portion of the money accruing from the sale of the national carrier, 92.5%, will be invested in the airline, while the remaining 7.5% will be paid to the government.The deal requires Arif Habib to invest an additional Rs 80 billion in PIA over the next five years.
This comes after the government took over the airline’s massive debt of Rs 654 billion last year to make the sale more attractive.Prime Minister Shehbaz Sharif praised the transparent nature of the sale.
“It will be the largest transaction ever in Pakistan’s history,” he stated during a federal cabinet meeting.The entire bidding process was broadcast live on local TV channels.
This successful sale came after a failed attempt last year when the airline didn’t attract the desired price.PIA’s privatization marks the end of an era for what was once a prominent airline.
Years of poor management had severely impacted its service quality and reputation, ultimately forcing the government to sell it to private investors.
