Islamabad, Sep 7: The government has demanded a guaranteed investment of $500 million from potential buyers of Pakistan International Airlines (PIA), and these buyers have refused to meet key performance targets such as expanding the airline’s fleet and operating on a predetermined number of domestic and international routes.
Six bidders were shortlisted: Fly Jinnah, Airblue, Arif Habib Corporation, Blue World City, Pak Ethanol (Pvt) Consortium, and YB Holdings Consortium. Of these, some have expressed issues with the planned sale-purchase agreement and shareholders’ agreement, according to a news article. The goals of the requirements outlined in these documents are to safeguard the government’s interests and guarantee the resuscitation of PIA.
In an effort to privatize the airline, the government has placed restrictions on PIA, requiring it to expand its fleet and domestic and international flights within a three-year period.At least two prospective purchasers, however, have rejected these demands, arguing that they have no business being a part of the legally binding contract.
Additionally, the bidders have proposed keeping the sale proceeds and reinvesting them in PIA instead of sending them to the exchequer. Furthermore, the government believes that a $500 million to $700 million guaranteed investment in PIA is essential to turning the airline profitable, but bidders are reluctant to offer this amount. In order to secure the investment, the government also asked for bank guarantees; however, some parties have simply provided assurance assurances, which has further complicated the negotiations.
Retention of employees is still a problem. The government suggested that the buyer assume the liabilities of the PIA employees and keep them on board for a minimum of three years. PIA has already transferred Rs623 billion of its entire liabilities to a holding company in an effort to make the airline more appealing to bidders.. Notwithstanding these initiatives, the buyers are still unwilling to take on major operational or financial obligations, such as the airline’s pension obligations to its employees.
