ISLAMABAD: Pre-qualified bidders for the privatization of Pakistan International Airlines (PIA) have refused to pay outstanding dues owed to the Federal Board of Revenue (FBR) and the Civil Aviation Authority (CAA), creating a new obstacle in the airline’s long delayed sale process.
According to officials briefing the Senate Standing Committee on Privatization, the bidders have argued that the amounts owed were already collected through ticket sales and utilized by PIA, and therefore should be booked against the holding company instead. However, both the FBR and the CAA have rejected any possibility of waiving these dues.
PIA reportedly owes Rs28 billion to the FBR and Rs7 billion to the CAA.
Pre-qualified bidders including Arif Habib Group, Lucky Cement, Fauji Fertilizer, and an Airblue-led consortium have completed their due diligence, including aircraft inspections, legal and financial assessments, and site visits.
Privatization Secretary Usman Bajwa informed the committee, chaired by Senator Afnanullah, that discussions on the terms and conditions with pre-bidders are in the final stage. The revised agreement will be signed once negotiations conclude. He confirmed that PIA currently has an outstanding debt of around Rs150 billion.
Pre-bidders have requested exemptions on sales tax for aircraft purchases and completion of technical conditions for Rs45 billion worth of payments. They are also assessing the potential reopening of European routes and the condition of the aircraft fleet.
The committee was told that proceeds from the sale of PIA’s Roosevelt Hotel in New York and its hotel in Paris could help retire a significant portion of the airline’s Rs600 billion debt. The expected revenue from both properties could exceed Rs500 billion.
Secretary Bajwa also revealed that PIA’s Manchester route has shown exceptional demand, with all tickets sold out until February 2026. Negotiations with bidders are ongoing regarding the retention of existing employees, with efforts to ensure on-job continuity for all staff. The bidding process is expected to be completed by December, with the transaction finalized before the end of the year.
Bajwa disclosed that PIA currently lacks funds for aircraft maintenance. “Global aviation companies prefer to see PIA continue in its weakened state,” he remarked.
He said that Karachi and Lahore airports require major renovation and capacity expansion, including runway upgrades, costing billions of rupees.
ISLAMABAD AIRPORT BEING OUTSOURCED
Meanwhile, Islamabad International Airport is being outsourced to the UAE under a government-to-government (G2G) arrangement. A previous offer by a Turkish company was rejected after it proposed only a 47% revenue share for Pakistan, compared to the government’s proposed 56–60%. For the outsourcing of Islamabad International Airport G2G agreement has now been shared with authorities.
Under the outsourcing arrangement, FIA, Immigration, and Airport Security Force (ASF) personnel will continue their duties, and passenger data will not be shared with foreign operators.
Regarding the Roosevelt Hotel, the Privatization Secretary said a new financial adviser will be appointed next month to oversee its leasing process. The old 17 story structure will be demolished and replaced by a new 1.3-1.4 million square-foot building, subject to US administration approval.
The committee also instructed that land belonging to Precision Engineering Company, a PIA subsidiary, should not be used for non-essential purposes. Officials confirmed that PIA Holding Company’s business complex has already been handed over to the Pakistan Air Force with federal cabinet’s approval. PEC currently owns around 200 acres of land in Karachi, where defence related equipment is being developed.
