ISLAMABAD: The Privatization Commission Board on Wednesday recommended the Rs135 billion bid submitted by the Arif Habib Consortium for a 75 percent stake, forwarding it to the Cabinet Committee on Privatisation for approval before final ratification by the federal cabinet.
Earlier, addressing a news conference here, adviser to the Prime Minister on Privatization Muhammad Ali said the move would boost efficiency, attract fresh investment and reduce the government’s financial burden, with the airline’s route network emerging as its most valuable asset.
Flanked by Information Minister Attaullah Tarar and senior officials, Ali said the move would restore PIA’s lost stature, enhance competition in the aviation sector and contribute to economic growth. PIA carries about 4 million passengers annually and holds nearly 30 percent market share. With professional management and investment, its performance can significantly improve, he said.
Ali noted that past policy and management failures had weakened the airline. PIA once operated around 50 aircraft and should have expanded to nearly 100, but operational capacity declined due to lack of modernization and inability to compete globally. Currently, the airline has 33 aircraft, of which 19 are operational. The fleet includes 16 Airbus A320s (11 operational) and 12 Boeing 777s (six operational), with 20 owned and 13 leased.
The adviser said previous privatization attempts in 1999, 2005 and 2024 failed, and the airline suffered annual losses running into billions of rupees after 2015 due to limited digitalization and global competitiveness. The latest transaction, completed Tuesday, concluded the privatization process after extensive consultations.
Ali congratulated the nation and acknowledged the guidance of Prime Minister Shehbaz Sharif, Deputy Prime Minister/Foreign Minister Ishaq Dar, and the army chief. The Arif Habib Consortium submitted the highest bid and now awaits final approval.
The government will receive Rs10 billion in cash while retaining a 25 percent stake valued at Rs45 billion, bringing the total value to roughly Rs55 billion. Ali emphasized that the federal government would no longer operate an airline business, signaling a broader policy shift, though provinces may enter the sector if they choose.
Meanwhile, Pakistan International Airlines (PIA) is expected to be run by a new owner from April next year and receive fresh capital under a deal to privatise the flag carrier, the country’s privatisation chief said on Wednesday.
A consortium headed by the Arif Habib Corporation emerged as the top bidder in a live-televised auction for a 75 percent stake in PIA on Tuesday, marking a breakthrough for the government’s long-delayed privatisation of the carrier.
The Arif Habib consortium offered Rs135 billion ($482.14 million), surpassing a government reserve price of Rs100 billion, in a sharp turnaround from last year’s failed sale attempt.
Muhammad Ali, the privatisation adviser to the prime minister, told Reuters in an online interview that the state expects a new owner to be running the airline by April, subject to approvals.
The process now moves to final approvals by the Privatisation Commission Board and the cabinet, expected within days, with contract signing likely within two weeks and financial close after a 90-day period to meet regulatory and legal conditions.
Ali said the government would receive about Rs10 billion in cash upfront and retain a 25 percent stake valued at around Rs45 billion.
The deal was structured to inject fresh capital into the airline rather than simply transfer ownership, he said. “We did not want a situation where the government sells the airline, takes its money and the company still collapses,” Ali said.
The winning consortium also comprises fertiliser maker Fatima, private school network City Schools and real estate firm Lake City Holdings Limited.
Ali said Fauji Fertilizer Company, a military-run conglomerate, did not bid but could still join the winning consortium as a partner, noting the buyer can add up to two partners – including a consortium partner or a foreign airline – if they meet the qualifying criteria.
Allowing partners adds financial strength and could bring global aviation expertise, he said.
Ali said safeguards, including retained earnest money and an additional payment on signing, would allow the government to move to the second-highest bidder if the deal fails to close.
On labour, Ali said the buyer must retain all employees for 12 months after the transaction, with contracts unchanged, adding that the PIA workforce has already shrunk in recent years.
The sale is closely watched by the International Monetary Fund, which has pressed Pakistan to stop losses at state-owned enterprises.
Ali said the privatisation was a key test of Pakistan’s reform credibility with the IMF, adding that failure to offload loss-making state firms risked renewed pressure on public finances.
He said closing the deal would signal momentum on reforms and privatisations, adding that the government was working through a pipeline of future transactions once PIA closes.
Meanwhile, Defence Minister Khawaja Asif, who also heads the country’s aviation sector, has held bureaucracy responsible for the decline of the public sector while lamenting that politicians are often blamed for it.
“Those responsible for the ruin of [public sector] institutions will be held accountable,” Asif said while speaking on Geo News’ programme “Geo Pakistan” on Wednesday. The minister’s remarks come in the wake of Pakistan International Airlines’ (PIA) successful privatisation bid held a day earlier where consortium led by Arif Habib Corporation emerged as the top bidder for 75% stake in the national carrier via offering Rs135 billion.
The auction marked Pakistan’s first major privatisation in nearly two decades and comes amid pressure to reform loss-making state firms under a $7 billion International Monetary Fund (IMF) programme.
Arif Habib raised its bid from Rs115 billion to Rs135 billion after the Lucky Cement Limited-led consortium increased its earlier bid of Rs101.5 billion to Rs134 billion in the second round of the open-bidding.
Arif Habib and Lucky Cement consortia advanced to the open auction stage after placing offers above the reference price of Rs100 billion, while private airliner Airblue exited the bidding after submitting an offer of Rs26.5 billion.
The government officials have said that of the amount paid for the 75% stake, 92.5% of the proceeds will be invested directly into PIA, while the remaining 7.5% — amounting to Rs10.12 billion — will be transferred to the federal government.
Speaking about the national airline’s privatisation in Wednesday’s show, Defence Minister Asif blamed former aviation minister Ghulam Sarwar Khan’s statement claiming fake credentials of pilots which had resulted in wide-ranging restrictions and adverse repercussions for the national airline during the PTI-led government in 2020.
Noting that the government retains 25% stake in PIA, Asif said that the way airline was operating for the past four years, it would have been closed.
“Privatisation will improve the services of the national airline. There is an intention to privatise other institutions as well, which are operating at a loss,” he added, while pointing out that various distribution companies (Discos) were in loss.
Addressing the political situation, particularly, government’s potential talks with the PTI, Asif said that Prime Minister Shehbaz Sharif has invited the former ruling party multiple times, however, the other side sets conditions for dialogue. “If PTI puts its house in order, the talks can move forward,” he noted.
In addition to the defence minister’s remarks, PM’s Adviser on Political Affairs Rana Sanaullah has, in fact, cast aspersions on the possibility of parleys with the Imran Khan-founded party.
Stressing that politics and democracy progress through negotiations and that political parties should sit together and discuss relevant issues, Sanaullah recalled that the PTI founder did not respond positively to the PM Shehbaz’s invitation for talks in the past.
“The PTI founder is not doing politics; negotiations are not in his policy. No one has any authority in his party except him. The PTI founder does not want negotiations; he wants chaos,” the PM’s adviser remarked.
The ministers’ comments came a day after PM Shehbaz said that the talks with PTI are possible only on “legitimate” demands and attempts at blackmail under the guise of dialogue will not be tolerated.
The PM’s offer came two days after Imran, in a post on X, dismissed Mahmood Khan Achakzai’s call for dialogue and directed KP Chief Minister Sohail Afridi to prepare for a street movement.
