The privatization of Pakistan International Airlines (PIA) faced the major hurdle when the government received only one bid for the financially struggling airline. Six consortia were initially shortlisted, which include AirBlue Ltd., Arif Habib Corporation, Fly Jinnah by Air Arabia, YB Holdings Pvt., Pak Ethanol Pvt., and Blue World City. Five withdrew leaving just one bidder.
This one bid, with an “earnest money” deposit, serves as proof that the bidder is serious in making his commitment. This earnest money is a grave sign of seriousness on the part of the bidder as this proves that he would really pursue the transaction if it would push through. This was submitted to the Privatization Commission prior to the deadline, with an extension of the deadline from June to October because there were delays in finishing the required assessments.
This speaks to the urgent need for privatization of PIA.By 2023, PIA incurred an unthinkably massive amount of Rs. 75 billion. Liability on this group increased to Rs. 825 billion compared with asset base value standing at Rs. 161 billion. All these facts render the step of privatization strategically significant from the point of finance, but in terms of mere survival necessity.
At this juncture, one bidder is now left and should be compared against options while essentially critiquing the bid just to seal the deal in place. Once it is approved, the new national air line of the country that is going to emerge due to PIA has the chance to get shaken out for who knows how much longer.
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