Major contender withdraws from PIA privatisation race days before final bidding

ISLAMABAD: Fauji Fertiliser Company Ltd (FFC) has officially withdrawn from the bidding process for the privatisation of Pakistan International Airlines (PIA), leaving three contenders in the race ahead of the submission of sealed bids scheduled for December 23, officials confirmed on Saturday.

According to an article published by Geo News, senior officials at the Privatisation Commission told media that FFC informed the commission of its decision after opting not to deposit the required earnest money by the deadline, which fell on Saturday. The remaining three prequalified bidders have completed the necessary formalities and are expected to submit their sealed bids on time.

However, officials said that by choosing not to participate at this stage, Fauji Fertiliser still retains the option of joining any successful consortium later, a flexibility that would not have been available had it submitted a bid under the current rules.

Earlier, the Privatisation Commission Board had cleared four bidders for the process: Fauji Fertiliser Company Ltd; Airblue (Pvt) Ltd; a consortium led by Lucky Cement along with Hub Power Holdings, Kohat Cement and Metro Ventures; and another consortium headed by Arif Habib Corporation with Fatima Fertiliser, City Schools and Lake City Holdings. On November 7, AKD Group Holdings was inducted into the Arif Habib-led consortium.

Under the government’s privatisation framework, investors are being invited to bid for a 75 per cent stake in the national flag carrier. The successful bidder will also have the option to acquire the remaining 25 per cent shareholding within a 90-day window.

The bidding process will begin with sealed offers, after which the Privatisation Commission Board will approve the reserve price, followed by endorsement from the Cabinet Committee on Privatisation. Bids will then be opened publicly. If the highest bid exceeds the reserve price, open bidding will take place; otherwise, the top bidder will be given the right to match the set price.

Of the proceeds from the sale of the 75 per cent stake, 92.5 per cent will be reinvested directly into PIA to support its revival, while 7.5 per cent will go to the federal government. The government will retain the remaining 25 per cent stake unless the winning bidder exercises the option to purchase it later.

The latest attempt to privatise PIA comes after several unsuccessful efforts in the past. Officials say the current structure has been designed to attract serious investors by offering greater control, reduced upfront cash requirements and a cleaner balance sheet. In recent years, a substantial portion of PIA’s legacy debt has been transferred to a separate holding company, while tax relief measures and clearance of international routes have helped restore the airline’s financial viability.

PIA now reports positive equity of around Rs 30 billion and retains valuable assets, including rights to dozens of international destinations and more than 170 landing slots worldwide. However, officials acknowledge that the airline still requires significant capital injection and professional management to achieve a sustainable turnaround.

The government has also assured PIA employees of job protection for at least 12 months following privatisation. Pension obligations, medical benefits and other post-retirement liabilities will remain with the holding company, while salaries and ongoing benefits will be the responsibility of the new owners.

With bidding set to begin this week, authorities hope the revised terms and improved financial outlook will finally lead to a successful sale of the loss-making national carrier.