(Bloomberg) -- Pakistan’s sale of national flag carrier Pakistan International Airlines Corp. has become uncertain after the maiden bid was below the minimum price of about $306 million.
Blue World City submitted a bid 8.5 times lower than the government’s expected price of 85 billion rupees, according to details provided by the Privatisation Commission in Islamabad on Thursday. The government will review the outcome of the process, Secretary of the asset sale agency Usman Bajwa said, without saying when.
The airline’s shares fell 10%, declining for a sixth straight session, on Friday. Blue World, a real estate developer, was one of the six bidders shortlisted by Pakistan authorities and it was the sole group to put in a final bid.
Prime Minister Shehbaz Sharif’s cash-strapped government is trying to shore up the nation’s debt-ridden economy by selling loss-making state-owned enterprises that include the national airline, Roosevelt Hotel in New York and energy utility companies. The government has failed to privatize the airline in previous attempts because of protests by labor unions and political parties.
Revival
The winning bidder will need to invest $500 million in five years into the loss making carrier, Bajwa said in August. The airline has not made a profit in almost two decades and had to scale back operations in May last year after running short of funds to pay for fuel. It is only able to operate because of regular bailouts from the government.
Blue World declined an offer by the government to raise the bid saying its proposed price was appropriate.
The five groups that did not bid included businessman Arif Habib’s company, one of the country’s largest business groups Lucky’s Y.B. Holdings Pvt., Air Arabia’s Fly Jinnah, domestic airline Airblue Ltd., and Pak Ethanol Pvt.
Pakistan moved about three-fourths of the airline’s total debt of 830 billion rupees to government books to make the sale more attractive.
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