Pakistan International Airlines looks set to become the latest carrier in the region to start the hunt for a strategic equity partner, as the shortlist is drawn up for potential bidders for a stake in Air Lanka.
The Pakistani government called in a team from International Finance Corporation, the consulting arm of the World Bank, in December to advise on the airline's restructuring and part-privatisation, and on the search for a strategic airline partner within the next six to nine months.
While any approval of the IFC's proposal was unlikely before national elections on 3 February, the two parties leading the polls, the Pakistan People's Party and the Muslim League, are supporters of the continuing wider privatisation programme.
There is no indication of the size of the stake on offer, but a source close to the project rules out a majority share. The state currently controls 84 per cent of PIA, including a 57 per cent direct holding. The remainder is listed on the Karachi stock exchange.
The carrier desperately requires an infusion of fresh equity to finance new technology and aircraft. A former chairman describes this as 'the only way out for PIA'. The airline's pre-tax profit plunged by 78 per cent to PKR65.2 million (US$1.6 million) in the year ending 30 June 1996.
Meanwhile a shortlist of six bidders, thought to include AirAsia, Malaysia Airlines and Thai International Airways, has been drawn up for the sale of a 40 per cent stake in Air Lanka. The ultimate aim is to sell off the remaining 60 per cent once the airline is more profitable, explains Uli Baur of advisers SH&E. The successful bid will be revealed in the second quarter of 1997.
Source: Airline Business
