The Pakistani government's Privatisation Commission has formally called for expressions of interest (EOI) to acquire 51-100% of the share capital and management control of PIA - Pakistan International Airlines (PK, Islamabad International). The government agency issued the invitation on April 2.

Having transferred "non-core" assets and liabilities to a newly established holding company, the government is in a position to sell Pakistan International Airlines Corporation Limited (PIACL). Included in the acquisition are core assets (including aircraft) and liabilities; staff employed in the core airline operation as well as allied operations such as ground handling, training, engineering, and catering; and rights and obligations under various operational agreements executed by PIACL, including air services agreements, code sharing agreements, fuel supply agreements, passenger sales agency agreements, and foreign loan agreements.

"Pursuant to the scheme of arrangement, the existing shareholders of PIACL will become shareholders of PIA HoldCo (the newly established holding company), in the same proportion they currently hold in PIACL, and PIACL will become a wholly-owned subsidiary of PIA HoldCo, with a single class of ordinary shares," the EOI invitation said. "PIA Hold Co will be listed on the stock exchange, and PIACL will cease to be listed."

The government of Pakistan owns around 96% of PIACL's issued shares. As recently reported in ch-aviation, entities associated with Qatar, Saudi Arabia, and the United Arab Emirates have been discussing buying a stake in PIA with the government. Entities from other countries have also expressed some interest.

The EOI is open to companies, firms, body corporates, and other legal entities. However, it is not open to individuals or any entities owned or controlled by the Pakistani federal or provincial governments. Interested parties have until 1600L (1100Z) on May 3, 2024, to submit their electronic EOI, along with a non-refundable processing fee of USD5,000.

The invitation notes the Pakistani government and/or the Privatisation Commission reserves the right to introduce incentives, modify the transaction structure, or impose additional conditions. EY Consulting are serving as financial advisors to the sale. Haidermota & Co and Freshfields Bruckhaus LLP are serving as legal advisors, Knight Frank Valuations Services LLP are acting as valuators, Bauer Aviation Advisory is serving as the transaction's technical advisor, and Nutshell Communications Private Limited is handling public relations.

While PIA has consistently lost money and incurred substantial debts, the government is promoting the airline's attributes for privatisation. The EOI invitation notes that PIA flies around five million passengers annually, operating some 260 flights per week to 34 destinations.

"PIACL has access to 97 international routes with slots in some of the most attractive destinations providing direct access to passengers travelling between Pakistan and the large diaspora target markets," the invitation says. "Demand in the underserved Pakistani aviation market is expected to grow at a compound annual growth rate of 5.5% from FY2024 - FY2028. Pakistan's population and its extensive global diasporas provide a solid foundation for the growth of the aviation business."