Islamabad, Feb 4: The federal government is preparing to release an Expression of Interest (EOI) for the privatization of Pakistan International Airlines (PIA) this month. This move aims to attract potential investors by offering a significant incentive—a clean balance sheet and an exemption from the 18% GST on aircraft purchases. Additionally, the entire aviation sector will benefit from this GST exemption.
In the past, investors had hesitated to participate due to PIA’s Rs. 45 billion in negative equity and the GST burden on aircraft acquisitions. However, the government has taken steps to address these concerns. It has agreed to absorb Rs. 26 billion in Federal Board of Revenue (FBR) taxes, Rs. 10 billion in Civil Aviation charges, and any remaining pension liabilities, contingent on the successful privatization of the airline.
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To manage the transaction, the government has re-engaged Ernst & Young as the financial advisor. Furthermore, to streamline the privatization process, PIA’s non-core assets will be separated from the bidding process, ensuring that potential buyers focus solely on the core operations of the airline.
The National Assembly Standing Committee on Privatization has outlined certain conditions for the sale, emphasizing that the new buyer must commit to expanding PIA’s fleet by adding between 15 and 20 aircraft. In addition, the committee chairman has insisted that PIA employees’ job security should be safeguarded for at least five years following the privatization.
This initiative reflects the government’s strategic efforts to revive PIA, attract private investment, and enhance the airline’s competitiveness in the global aviation market. The hope is that these measures will provide a more attractive investment proposition, paving the way for the airline’s long-term sustainability and growth.
