The government has decided to sell Pakistan International Airlines’ (PIA) Precision Engineering Complex (PEC) to the Pakistan Air Force (PAF) for Rs2.5 billion in cash, significantly lower than the price offered by a sole bidder for a majority stake in PIA.
The total valuation of PEC, including liabilities, stands at Rs6.5 billion, according to a senior official. PEC, a PIA subsidiary specialising in manufacturing high-precision aerospace components, was separated from PIA’s core operations and placed in a holding company alongside Rs623 billion in liabilities.
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Its assets, as of December last year, were valued at Rs1.2 billion, while its liabilities totaled Rs2.9 billion, leaving it with a net negative equity of Rs1.73 billion.
The sale price includes Rs4 billion in pension-related liabilities for 259 retired employees and an additional Rs1.1 billion for 251 current employees. PAF has committed to paying Rs2.5 billion in cash within five years and assuming the remaining liabilities over the next decade.
A ministerial committee, led by Finance Minister Muhammad Aurangzeb, approved the transaction structure. The committee included the ministers of defence, aviation, and privatisation. A sub-committee assessed PEC’s assets and liabilities, valuing the transaction using the discounted cash flow method.
PAF plans to create a special purpose vehicle for the acquisition, ensuring no changes to employees’ contracts or benefits. The move follows unsuccessful attempts to privatise PIA, with earlier bidders walking away due to unresolved financial issues.
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