Bids Invited for PIA Privatisation

[Abbas Ali]

On July 4, a high-level meeting of the Board of Privatization Commission was held in Islamabad under the Chairmanship of Federal Minister for Privatization, Investment Board and Communications Abdul Aleem Khan to finalize the privatization of various institutions and regarding important issues related to it.

Federal Minister for Privatization Abdul Aleem Khan directed that all stakeholders should be kept on board for the privatization of national institutions and the Privatization Commission should ensure its full cooperation to the companies coming forward with serious offers. Abdul Aleem Khan said that the Prime Minister Shehbaz Sharif wants the privatization of PIA as soon as possible so there should be no further delay while completing the remaining process in this regard.

[arshad.altaf]

‘On sale’ PIA has 304 employees per plane, NA committee told

RAWALPINDI: Pakistan Inter­n­ational Airlines (PIA), which is cur­rently for sale, has an average of 304 employees per aircraft, the aviation division’s head told a National Assembly committee on Monday.

In a detailed briefing to the Standing Committee on Aviation, Saif Anjum, the aviation division secretary, said PIA has a fleet of 34 aircraft, of which 13 are on dry lease while the rest are owned by the airline.

Currently, PIA has a workforce of 10,323 employees, of which 7,399 are regular while 2,924 are outsourced.

The committee was informed that the privatisation process of PIA is almost complete.

Full story: https://www.dawn.com/news/1844753/on-sa ... ittee-told

[Amaad Lone]

Currently, PIA has a workforce of 10,323 employees, of which 7,399 are regular while 2,924 are outsourced.

PIA operational fleet is between 21-22 aircraft depending if we add both 777-200LRs.

The ratio of employee to aircraft is 491 per aircraft.

How can you include planes in the fleet that have not flown in 3-4 years.

[Amaad Lone]

Why buy PIA when you can invest the same money in Air Blue or Air Sial and get better results.

Plus as long as Pakistani airlines are banned from EU, UK and the US its a bad idea to sell PIA.

[Abbas Ali]

Pakistan to Delay Final Bidding for PIA by Two Months

Pakistan has delayed the final auction for state-owned Pakistan International Airlines (PIA) by two months until the end of September after potential bidders sought more information to assess the carrier.

https://www.bloomberg.com/news/articles ... epage-asia

[arshad.altaf]

PIAکے اثاثوں اورخسارے کی تقسیم کا فریم ورک تیار

کراچی (این این آئی) قومی ایئر لائن (پی آئی اے)کے اثاثوں اور خسارے کی تقسیم کا فریم ورک تیار کر لیا گیا جس کے مطابق نجکاری کے بعد 146ارب کے اثاثے اور 202ارب روپے کا خسارہ نئی کمپنی کو منتقل ہوگا۔دستاویز کے مطابق قومی ایئر لائن کے اثاثوں اور خسارے کو پی آئی اے اور ہولڈنگ کمپنی میں تقسیم کر دیا گیا، نئی کمپنی 55 ارب 70کروڑ خسارے سے پی آئی اے آپریشن کا آغاز کرے گی۔

https://e.jang.com.pk/detail/724630

[Abbas Ali]

PIA Privatization Expected in October

Pakistan government is set to hold a final auction for the state-owned Pakistan International Airlines (PIA) in the first week of October.

All issues related to the privatization of the national air carrier, including outstanding commercial loans, would be resolved within two weeks.

Earlier, Pakistan country’s central bank State Bank of Pakistan (SBP) refused to grant a waiver or exemption to prospective buyers regarding PIA's commercial bank loans of PKR 268 billion (USD 971.1 million) and other financial guarantees in dollar terms.

Even if this issue of the commercial loans is not resolved, the final bidder may adjust this amount in its offer.

Pakistan government initially planned to finalize PIA privatization on country’s Independence Day on August 14, but it was delayed following requests from bidders who were waiting for the airline’s latest audited accounts, aircraft lease agreements and clarity on flights to Europe that are currently banned.

https://www.arabnews.pk/node/2561871/pakistan

[arshad.altaf]

Joint venture proposed as best transaction structure for PIA’s Roosevelt Hotel

https://www.dawn.com/news/1853865/joint ... velt-hotel

ISLAMABAD: The board of the Privatisation Commission recommended a joint venture as the most suitable transaction structure for the Roosevelt Hotel, owned by Pakistan International Airlines (PIA) in New York, during its meeting on Wednesday.

The recommendation is in line with the Transaction Structure Report submitted by the financial adviser for the transaction, Jones Lang LaSalle Americas, Inc. (JLL), to the Privatisation Commission.

The consortium of Jones Lang LaSalle Americas, Inc. was appointed as the Financial Advisory Consortium (FAC) for the Roosevelt Hotel transaction in November last year, with the Financial Services Agreement (FASA) being signed in February this year.

As part of its deliverables, the FAC was tasked with submitting a Transaction Structure Report, suggesting alternative transaction structure options for the mixed-use development of the Roosevelt Hotel. The report considered and evaluated options, including outright sale, joint venture development, and long-term lease.

Based on its analysis and experience in the New York real estate market, JLL recommended the joint venture as the most suitable transaction structure to maximise the expected proceeds and value for the government of Pakistan.

Minister for Privatisation Abdul Aleem Khan, who chaired the board meeting, commended JLL for compiling a comprehensive transaction structure report and hoped that the government would secure the best deal for the Roosevelt Hotel transaction.

A Privatisation Commission press release issued after the meeting detailed several significant decisions concerning the ongoing privatisation process of various government institutions.

The board unanimously approved financial and technical aspects, including the appointment of financial advisers for PIA, Discos, and the Roosevelt Hotel, among others.

The board also approved the selection of six firms as prequalified financial advisers for the privatisation programme. These firms include Citigroup Global Markets Ltd of the UK, J.P. Morgan, Alvarez and Marsal of UAE, EY Consulting LLC of Dubai, PWC-A.F. Ferguson and Company, and BDO Ebrahim and Company Pakistan. This prequalification will enable the Privatisation Commission to engage financial advisers promptly for upcoming transactions.

Minister Aleem Khan expressed his satisfaction with the performance of the Privatisation Commission Board, noting that the inclusion of “world-class” financial advisers is a positive step forward.

He emphasised the need to relieve the national exchequer from the burden of loss-making institutions through privatisation, stressing the importance of transparency in this sector.

“We have to make better, solid and lasting decisions in the wider national interest,” he said, adding that any institution that meets the criteria and follows the rules and regulations must be given a chance to take part in the privatisation process.

Published in Dawn, August 22nd, 2024

[Abbas Ali]

Senate Standing Committee on Privatization agrees to give 75% shares of PIA to the winning bidder in airline's privatization process.

https://jang.com.pk/news/1385406

Abbas

[Amaad Lone]

I think any new owner will wait for the ban to be lifted before buying PIA.

Plus PIA is still carrying 200 billion rupees in loans on its balance sheet.

Latest government demand to keep all employees for another 5 years is not going help them find buyers.

Pakistani government is best at hiring consultants paying them millions of dollars in fees and then NOT LISTENING TO THEM.

[Abbas Ali]

Slim prospects for PIA privatisation with only two serious bidders

On August 29, Secretary Privatisation Commission disclosed that out of six selected parties, only two appear serious about acquiring PIA. The entity may not fetch as good a price as was possible during the last attempt to privatize it eight years ago.

https://tribune.com.pk/story/2492154/sl ... vatisation

[faisal-777]

So who are those two? would be interesting to know.

Maybe if EU ban is lifted, some parties will change their mind.

[Amaad Lone]

The only way PIA could have actually improved was if a foreign airline that had experience was going to buy PIA.

Local airlines with partners with Air Sial or Air Blue along with Zardari Inc is not going to help PIA.

[Abbas Ali]

Talking to The Express Tribune, Arif Habib, Chairman of Arif Habib Corporation, one of the pre-qualified bidders for PIA, said the Government of Pakistan business plan after the privatization of PIA showed that the buyer could not resell it for at least three years.

Habib said the new buyer would expand PIA's fleet by adding at least 20 aircraft.

At present, PIA is managing a fleet of 34 long- and short-haul airplanes. PIA owns 20 aircraft while the remaining have been acquired on dry lease. Besides, the airline has a workforce of 10,323 employees, meaning an average of 304 workers for each airplane.

He projected that the potential buyer would prefer to purchase 75% of PIA stake to gain majority control over the airline.

Habib expressed hope that the PIA bidding process would be concluded in less than a month by October 1, 2024.

He highlighted that PIA's major issue in the past had been its debt and interest payments. Of the total debt of PKR 800 billion, about PKR 600 billion has been put on the balance sheet of a newly created holding company while the buyer will be responsible for repaying the remaining PKR 200 billion.

Habib pointed out that most of PIA's debt was owed to the Federal Board of Revenue (FBR) and Pakistan Civil Aviation Authority (CAA). "It is crucial that the buyer is given a reasonable time frame to repay the debt. Demand for immediate repayment could adversely affect the price."

He said the government had yet to suggest the terms for the repayment of debt worth PKR 200 billion to the potential bidders.

He noted that the unresolved debt issue might make potential buyers wary over fears that the switch could be turned off any moment. When the airline was under government control, institutions always provided some leeway.

While PIA was operationally viable, Habib said, if the debt and employees-related issues were resolved after takeover, the airline could quickly turn around and start making profit.

He floated an idea recently, asking the government to invest the privatization proceeds in the national flag carrier instead of using them for other purposes. "This will fix the airline's issues soon and help make profit in future."

While sharing the financial performance of the airline, the Ministry of Aviation apprised the National Assembly Standing Committee on Aviation in July that PIA had posted an operational profit of PKR 3.187 billion for January-December 2023, adding, however, that the net loss for the period was PKR 103.90 billion.

Apart from PIA's losses and liabilities, of which PKR 628.5 billion had already been transferred to PIA Holding Company to facilitate privatization process, the committee deliberated on the functioning of the Aviation Division and its attached departments.

Source: https://tribune.com.pk/story/2493611/pi ... in-a-month

[Amaad Lone]

At present, PIA is managing a fleet of 34 long- and short-haul airplanes. PIA owns 20 aircraft while the remaining have been acquired on dry lease. Besides, the airline has a workforce of 10,323 employees, meaning an average of 304 workers for each airplane.

What a joke.

4 777-300ERs on register ( 2 have not flown for over three years and BHW considered scrapped)
2 777-200LRs on register ( usually 1 is active at a time)
6 777-200ERs on register (BMH & BGL not flown for a long time with BGL considered scrapped)
17 A320-200 on register (five A320s grounded for a long time)
2 ATR72-500 on register (both unoperational for along time)
3 ATR42-500 on register (1 scrapped leaving 2 operational)

34

Net fleet

2 777-300ER
2 777-200LR
4 777-200ER
12 A320-214
2 ATR42-500

22 operational aircraft if you look at 2024 operational fleet.

With 10,000 employees the ratio is nearly 500 per plane.