As per news flow, the privatization Commission (PC) board endorsed a transaction plan to divest at least 51% of Pakistan International Airlines (PIAA) shares, following a balance sheet adjustment where approximately 75% of the PKR 825bn will be transferred to a new entity. The parked amount is proposed to be serviced from the proceeds of the privatisation and sale of the hotels and properties.

This will subsequently be presented to the Cabinet Committee on privatization for a conclusive verdict, leading to the Federal Cabinet’s endorsement. However, legal barriers prevent selling majority stakes to foreign entities, including the Pakistan Civil Aviation Authority Act and Air Service Agreements.

To navigate this, foreign buyers would need a local partner. In recent discussions, the privatisation minister hinted at the potential for a government-to-government sale of PIA.

The recommended legal separation by financial advisors for the divestment focuses on isolating the core aviation business and assets, with the initial objective being the divestment of core aviation services. Basic engineering services and international routes would be part of the core assets offered for sale to buyers.

Courtesy – AHL Research