ISLAMABAD: Meeting a key condition of the IMF-backed reform programme, Pakistan on Tuesday struck its most consequential privatisation deal in two decades, selling a 75 percent stake in loss-making Pakistan International Airlines (PIA) for Rs135 billion (around $480 million) to an Arif Habib-led consortium, a transaction designed less to fill government coffers than to pump fresh capital into a struggling national carrier.
Under the transaction, only Rs10.125 billion — 7.5pc of the proceeds — will go directly to the national exchequer, while Rs124.875 billion will be reinvested into the PIA to fund its turnaround. Officials say the airline’s post-transaction valuation stands at about Rs180 billion.
The wining consortium led by Arif Habib Corporation along with Fatima Fertilizer, AKD Group, City Schools and Lake City Holdings, edged out the Lucky Cement Consortium, which made a final offer of Rs134 billion in a tense open auction. The Lucky Cement-led consortium includes power producer Hub Power Holdings, Kohat Cement Company and investment firm Metro Ventures. AirBlue had offered a bid of only Rs26.5 billion, far below the government’s confidential reference price of Rs100 billion.
The sale marks a breakthrough after years of failed attempts to offload the loss-making airline. As part of International Monetary Fund (IMF)-mandated reforms to reduce fiscal strain and restore investor confidence, the government had renewed efforts to privatise PIA after an earlier auction collapsed last year, drawing just a single bid of Rs10 billion far below the official benchmark of over Rs85 billion for a 60pc stake.
With the bid concluded, the sale-purchase agreement (SPA) is expected to be signed within two weeks. The consortium will be required to pay two-thirds of the bid amount within 90 to 120 days, with the remaining one-third payable within 12 months. The government will retain a 25pc stake for now, a holding, officials describe as valuable, with the option for the buyer to acquire it later at a 12 percent premium. The wining consortium has 90 days to decide, whether to acquire these 25 percent.
After the auction, Arif Habib was cautious about the remaining shares. “First our focus was on 75 percent shares, and now we will consider it,” he said, adding, “Fauji Fertilizer can also join us.”
Interestingly, Fauji Fertilizer Company, which earlier opted out of the bidding process, is allowed under the transaction structure to rejoin the winning group.
The government has also moved to cushion political and labour sensitivities tied to the airline’s future. Employees have been guaranteed job security for 12 months, while pension liabilities, medical benefits and post-retirement perks will be handled by the state-owned holding company. Salaries and current benefits will be paid by the new owners. Prime Minister’s Adviser on Privatisation and Chairman of the Privatisation Commission Muhammad Ali framed the deal as a strategic reset rather than a fire sale. The government’s objective was “not merely to sell PIA and collect money, but to turn it into a best-in-class airline,” he said. “Two-thirds of the payment will be made upfront, while the remaining amount will be paid later,” he added, noting that “the outstanding amount has also been secured through safeguards.”
Ali said the transaction would pave the way for broader reforms. “No major privatisation of a national asset has taken place in the last 20 years, making this move historic for Pakistan,” he said.
The PIA, founded in 1955 and once a symbol of national pride, has become a fiscal burden amid years of losses, safety lapses and shrinking operations.
In recent years, the airline had been incurring losses of about Rs50 billion annually, which are expected to end with its transfer to the private sector, Ali said.
Only 18 of its 34 aircraft are currently operational. While Europe and Britain lifted flight bans this year, the US operations remain suspended.
Speaking to reporters after the bidding process, the winning consortium leader Arif Habib said PIA currently has 14 operational aircraft and that expanding the fleet would be a top priority. He said the number of planes would be increased to 38 in the first phase and to 65 in the second phase of the turnaround plan.
Habib said the privatisation of PIA would benefit Pakistan’s economy by encouraging foreign investors to look toward the country and by boosting overall investment activity.
He described PIA’s workforce as highly capable and said employees would be offered attractive jobs under the new ownership. Habib also said there was a possibility that the Fauji Fertilizer Group could join the consortium at a later stage.
Later, in a statement on ‘X’, Prime Minister Shehbaz Sharif termed it, “A historic day for Pakistan”, adding, “It was our firm commitment to the people of Pakistan that speedy and concrete steps would be taken to privatise loss-making state-owned enterprises that have been a burden on the economy.”
The successful completion of the transparent and highly competitive bidding process for the privatisation of PIA marks an important milestone in fulfilling that commitment.
“I congratulate Deputy Prime Minister and Foreign Minister Ishaq Dar, Chief of Army Staff and Chief of Defence Forces Field Marshal Syed Asim Munir, Defence Minister Khawaja Asif, Finance Minister Senator Muhammad Aurangzeb, Adviser on Privatisation Muhammad Ali, and his entire team for successfully conducting and concluding the PIA bidding process with utmost professionalism and transparency.”
He further said, “I have always maintained that regardless of which consortium emerged successful, Pakistan would be the ultimate winner and today’s outcome fully vindicates that belief. The strong participation of our leading business groups and some of Pakistan’s most seasoned and respected investors is a powerful vote of confidence in our economy and its future. “This is work in progress and we will continue our hard work with even greater vigour and perseverance in the days ahead to build a brighter future for our nation. InshaaAllah!”
Separately, in a statement issued by the PM’s Office, the prime minister said: “Upon assuming office, I had promised the nation that steps would be taken for the privatisation of state-owned enterprises; this process of PIA’s privatisation is a very important milestone in this regard.”
“By the grace of Allah, the bidding process was extremely transparent,” he said adding that the privatisation of PIA and other state-owned enterprises will play an important role in further stabilising the economy. He noted that investors’ confidence in the national economy had been restored and PIA’s privatisation was its proof. With the cooperation of all state institutions, he said the national economy was becoming stable.
The prime minister expressed the government’s determination to ensure national development, prosperity and public welfare through partnership with the private sector.
The Arif Habib-led winning consortium of PIA’s 75 percent stakes may allow Middle Eastern airlines and other strategic partners to join its winning bid once initial agreements are finalised.
Speaking on Geo TV show ‘Aaj Shahzeb Khanzada Kay Saath’, Arif Habib confirmed that Fauji Fertilizer could potentially join the consortium. When asked about Middle Eastern airlines participating, he said they could indeed come on board but emphasized that timing is crucial.
“First, we want the 75 percent stake to be concluded and signing completed. Only then we will consider the remaining 25 percent and potential partnerships,” Habib said. He added that the consortium has a 90-day window to evaluate and decide to acquire the remaining 25pc stake, ensuring both confidence and alignment with future partners.
The phased approach underscores Pakistan’s cautious strategy in structuring high-value joint ventures, balancing domestic participation with international collaboration.
Analysts said the involvement of strategic foreign partners, particularly Middle Eastern airlines, could enhance investment credibility and operational expertise.
Separately, Adviser to PM Muhammad Ali clarified that the hotels in New York and Paris were not part of the PIA privatisation deal. Speaking to anchorperson Shahzeb Khanzada, the PM’s adviser said that the Roosevelt Hotel in New York and Scribe Hotel in Paris were not part of the transaction. “They will remain with the government. They are part of the PIA Holding Company,” he said.
Ali revealed that the federal cabinet has finalised a plan to enter a joint venture with a New York real estate developer for the construction of a “high-rise” on the site for “wealth creation”. On PIA’s bidding round, Ali said that the government had demonstrated seriousness by completing a long-pending transaction.
Looking ahead, Ali said further progress on privatisation was expected in 2026, arguing that privatisation would increase tax collection. He noted that the government’s internal expectation for the bid was up to Rs120 billion. “The bid that came in is better for both the government and the buyer,” he said, adding that Rs125 billion would be injected directly into the PIA following the transaction.
Ali said that major airports in Lahore, Islamabad and Karachi would be offered to the private sector for management under long-term concessions. “All the three airports have come to us. The Privatisation Commission has begun work on it. We are in negotiations with the ADB [Asian Development Bank] team for the appointment of an adviser,” he said.
He said the government planned to begin work on the Islamabad airport first, followed by the Karachi and Lahore airports. Ali clarified that the three airports would be offered through open bidding, similar to Tuesday’s bidding process for the PIA.
