Pakistan is expected to trigger a new expressions of interest campaign for the acquisition of a majority stake in PIA - Pakistan International Airlines (PK, Islamabad International). It will be in the second time in less than 12 months that the government has attempted to sell off the carrier.
Islamabad's The News International newspaper reports on a briefing given by Privatisation Committee secretary Usman Bajwa on February 3 to the National Assembly Standing Committee on Privatisation. He said that his committee, an agency of the Ministry of Finance, was "fully prepared" for another attempt to sell PIA.
A previous October 2024 auction flopped after it attracted just one PKR10 billion rupee (USD36 million) bid, well below the PKR85 billion (USD305 million) reserve price. While the government has shunted most of PIA's not inconsiderable debts to a newly established holding company, approximately PKR45 billion (USD161 million) in debts remain on PIA's balance sheet.
In the wash-up of the failed auction, that remaining debt was identified as a significant deterrent to would-be buyers. The government "now plans to devise a mechanism" to remove the liabilities from the books, saying this will make PIA a more saleable proposition.
The government has also brokered a deal with the International Monetary Fund to waive an 18% general sales tax (GST) on aircraft purchases. Pakistan is the subject of an IMF bailout, and the fund currently has a say in tax regime changes, among other things. Any buyer of PIA must undertake a renewal of the airline's ageing fleet within specific timeframes. The government argues the GST waiver will make investing in PIA more affordable. The new buyer will be required to initially add 15 to 20 new aircraft to the fleet.
The GST exemption will also be available to every Pakistani airline operator after PIA's privatisation. The government argues this will help private airlines update their aircraft and grow their business.
