The long-awaited privatisation of Pakistan International Airlines (PIA) has reached a major milestone, with the Arif Habib Group-led consortium securing the winning bid at a record-setting Rs135 billion. Outbidding the Lucky Group by just Rs1 billion, this high-stakes battle marks a significant shift in the country’s aviation sector and signals renewed investor confidence in national assets.
A Fiercely Contested Bid
The final bidding round was one of the most competitive in Pakistan’s recent privatisation history. Arif Habib’s consortium, which includes Fatima Fertilizer, City School, and Lake City Holdings, emerged victorious after three rounds of aggressive bidding. The runner-up, Lucky Group, had put forward a strong Rs134 billion offer.
This success comes after last year’s privatisation attempt collapsed due to weak interest, where only a single Rs10 billion bid was submitted against a reserve price of Rs85 billion. This time, however, the government raised the reserve price to Rs100 billion and attracted serious contenders, including private airline Airblue.
Deal Structure and What It Means
The winning consortium will acquire a 75% controlling stake in PIA, with an option to purchase the remaining 25% within 90 days. Under the framework, two-thirds of the proceeds must be paid within the first 90 days, and the rest over a 12-month period.
Interestingly, only 7.5% of the total proceeds will go directly to the government. The bulk of the funds will be reinvested into PIA to support much-needed reforms, including fleet upgrades and operational enhancements.
A Turning Point for PIA
This privatisation marks a potential turnaround for PIA, which has long struggled under state ownership. From years of financial hemorrhaging to outdated infrastructure and mismanagement, the national carrier has been a burden on the public purse. Last year alone, PIA’s equity was a negative Rs45 billion. After restructuring and transferring liabilities to a holding company, its equity has since improved to Rs30 billion, making it more appealing to investors.
Analysts believe this move could save the government billions in losses annually and finally put PIA on a path toward sustainability. Added incentives such as tax exemptions on aircraft leases and liability transfers sweeten the deal for the private operator.
The Broader Impact
Privatisation of PIA isn’t just about changing ownership—it’s about resetting the foundation of a national institution. The success of this deal could set a precedent for future privatisations, encouraging private-sector involvement in other loss-making public enterprises.
Chairman of the Privatisation Commission, Muhammad Ali, remarked that the process reflects the government’s broader policy of opening investment channels and easing fiscal pressure on state institutions.
