New PIA owners seek partner to revive airline

• Several parties shown interest in joining group, says Arif Habib.
• Adds due diligence underway to find partners who can add value.
• Fauji Fertiliser joined consortium after Rs135bn privatisation bid.
  

A consortium led by Arif Habib Corp is looking to bring in a new partner to strengthen its bid to turn around the struggling Pakistan International Airlines following the acquisition of a majority stake.

“We are doing due diligence to see who can bring value,” Karachi-based business tycoon Arif Habib told journalists on Sunday, who led a group of companies that bought a 75% stake in Pakistan International Airlines Corp last month, The News reported.

“A lot of people have shown interest,” he added.

His remarks came weeks after Fauji Fertiliser Company Limited joined Arif Habib Consortium, which acquired a 75% majority stake in PIA with the highest bid of Rs135 billion in an auction held for the privatisation process of the national flag carrier.

The federal government sold its majority stake in the national flag carrier for Rs135 billion ($482 million) to the group, meeting a key condition set by the International Monetary Fund (IMF) for its loan.

PIA has survived on government bailouts for years after struggling with massive losses and high debts caused by operational inefficiencies, an aging fleet, and political intervention.

Past attempts to sell the airline have been blocked by protesting employees and opposition parties. The fleet will be increased to 38 planes from 18 as the group seeks to expand the airline’s operations and make new hires, Habib said in Karachi.

The new owner is set to take over operations in April and is not allowed to sack employees for one year, under the conditions set by the government for privatisation. Current employees will have one year after the takeover to show performance and be retained, he said.

Arif Habib Corp and Fatima Fertiliser Ltd together have a 25 per cent stake in the airline, while military-run Fauji Fertiliser Ltd has an equal share, said Habib.

AKD Group, owned by businessman Aqeel Karim Dhedhi, City Schools, and Lake City Holdings own 25 per cent. The consortium has the option to buy the remaining government stake at a premium.