Pakistan draws five potential buyers for PIA including Fauji Fertilizer

ISLAMABAD: In its efforts to sell its struggling national airline, Pakistan has received expressions of interest from five parties, including business groups and a military-backed firm Fauji Fertilizer, the Privatisation Ministry said on Thursday.

The bids were submitted ahead of a June 19 deadline to acquire up to 100% of Pakistan International Airlines which has accumulated over $2.5 billion in losses in roughly a decade. Still, following a major restructuring, it posted its first operating profit in 21 years in the year through June 2024.

The sale is seen as a test of Pakistan’s ability to shed loss-making state firms and meet conditions of a $7 billion International Monetary Fund bailout. It would be the country’s first major privatisation in nearly two decades.

Eight parties submitted their expression of interests, but only five of them provided documents of qualification, the ministry said in a statement.

Among the five groups is a consortium of major industrial firms: Lucky Cement Ltd, Hub Power Holdings Ltd, Kohat Cement Co Ltd and Metro Ventures.

Another is led by investment firm Arif Habib Corp Ltd and includes fertiliser producer Fatima Fertilizer Co Ltd, private education operator The City School, and real estate firm Lake City Holdings.

Fauji Fertilizer Company Ltd , a military-backed conglomerate, Pakistani airline Airblue Ltd and a consortium that includes Bahria Foundation, domestic carrier Serene Air and U.S.-based Equitas Capital LLC also submitted documents.

“The government will review the documents and give qualified parties access to data for due diligence,” the statement read.

FULL DIVESTMENT

Once a leading global airline, PIA resumed European flights in January after a four-year EU ban linked to safety concerns, and is seeking UK clearances, seen as key to its turnaround. Industry insiders say the winning bidder is expected to partner with a foreign airline to run operations.

A previous attempt to sell the airline failed as a $36 million bid from real estate firm Blue World City fell short of the $305 million floor price, with concerns over debt, staffing, and limited control.

This time, the government is offering full divestment, has scrapped the sales tax on leased aircraft, and is providing limited protection from legal and tax claims. Around 80% of the airline’s debt has been transferred to the state.

“We’re targeting 86 billion rupees in privatisation proceeds this year,” Privatisation Minister Muhammad Ali told Reuters.

“For PIA, in the last round of bidding, 15% of the proceeds were going to the government, with the rest staying within the company.”
He said bidders would be pre-qualified in early July, with due diligence lasting 2 to 2.5 months, and final bidding and negotiations expected in the fourth quarter of 2025.

Officials hope the sale will revive the stalled privatisation drive. Other planned deals include the Roosevelt Hotel and several power firms, by mid-2026.

“From the Roosevelt Hotel, we’re expecting over $100 million as first payment during this year,” said Ali.