The Pakistani government has selected a consortium led by multinational business consultancy firm Ernst & Young as its financial advisor in the partial privatisation of PIA - Pakistan International Airlines (PK, Islamabad International). The Ministry of Privatisation's Privatisation Commission Board (PCB) made the announcement after a November 10, 2023, meeting in Islamabad.

"On the basis of the laid down criteria, the evaluation committee formed by the board declared the consortium led by Ernst & Young as the top-ranked interested party," read a PCB statement released after the meeting. "The board formed a negotiating committee and tasked it to conclude the financial services agreement with the top-ranked bidder." Ernst & Young will help create a transaction structure to complete the partial privatisation.

Before the meeting, Pakistan's privatisation minister, Fawad Hasan Fawad, told local media that eight entities and consortiums had submitted technical and financial bids to assist the privatization. In addition to Ernst & Young, other contenders included Rothschild & Co (in conjunction with Alvarez and Marsal), Houlihan Lokey, Tiagra Advisory and Investment Services, Investor Advisory Services (IAS), Cruise Aerospace, Ijaz Tabasum Advisory Services, and Ceabury Securities. The minister says he hopes to sign an agreement with Ernst and Young as soon as possible and receive a preliminary report from them in January 2024.

Government evaluation documents seen by ch-aviation reveal a bid by a consortium comprising Houlihan Lokey (lead), Cleary Gottlieb, Oliver Wyman, Blue Skies, and Akhund Forbes was rejected as non-compliant. The winning Ernst & Young lead consortium includes Bauer Aviation Advisory, Haidermota & Co, Freshfield Bruckhaus Deringer, Nutshell, and Knight Frank. Alvaraz & Marshall leads the runner-up consortium that included Rothschild & Co and White & Case. The third placegetter was a consortium led by Seabury International Corporation Finance and included Norton Rose Fulbright, Seabury Airline Strategy Group, and Ahmed & Qazi. Ernst & Young did not respond to a request for comment.

The current caretaker government wants to hive off the debt into a separate entity and establish a public-private partnership with a foreign airline which would then take a 40% stake in PIA in exchange for putting a significant amount of equity into the airline and taking day-to-day control of it. In August, the government amended legislation to allow the partial privatisation to proceed.

However, reports are also coming out of Pakistan about a meeting between senior government officials and the International Monetary Fund (IMF) late last week. The IMF was reportedly told there would be no privatisation of any state-owned entities until after the next general election.

Pakistan's current government is in caretaker mode until after the next general election, which is on hold pending the completion of a national census and redrawing of constituency boundaries. There is an expectation this may be done by mid-December, after which an election date can be announced. Nonetheless, the Privatisation Minister says he can push through the PIA partial privatisation by the end of the first quarter of 2024.