A national carrier that bleeds year after year cannot be run like a family heirloom, periodically dusted off for speeches and then shoved back into the cupboard of state-owned delusions
PIA’s problem was never a bad quarter or an aberrant fiscal year. It perfected a lifestyle of loss, funded on autopilot, with bailouts as an integral and inherent component of its business plan. Annual losses hovered around Rs50 billion and, in some recent years, spiked to roughly Rs105 billion, while accumulated losses climbed to well over Rs650 billion, making the status quo not only unsustainable but fatally parasitic. But if we’re going to celebrate the sale, or applaud the ‘take-off’, we should at least be candid about who accrued the gains, and who is left bearing the burden and enduring costs. Once that is acknowledged, you can evaluate every other debate without the spin: the sale price, the aircraft and leases and the promised investment.
What was actually sold (and what was quietly left behind) is the part that gets glossed over in the rush to celebrate a headline. If I sell you a rusted-out automobile, I don’t usually promise to keep paying your petrol bills and your grandfather’s outstanding mechanics’ fees for the next 20 years. Yet here we are. The state used PIA as a personal fiefdom for decades. Now that the party is over, the public is being asked to pay the cleaning crew so the new landlord can move in rent-free. This was not a sale of ‘PIA, the entire tragedy’. It was the sale of a carved-out, cleaned-up operating airline.
The state pushed a mountain of legacy liabilities into a holding structure and presented buyers with a version of PIA that looked less like a fiscal crime scene. So yes, the buyer gets something closer to an airline. But the taxpayer gets the historical wreckage and something closer to a long-term payment plan. The debt doesn’t disappear; it simply changes address. And the new address is ‘the public’.
This is not a one-off cost. Servicing that legacy pile creates ongoing fiscal pressure, year after year. One widely discussed slice of this is the banking rollover: a 10-year restructure around 12 per cent, translating into roughly Rs32 billion a year in interest payments. Call it ‘restructuring’, ‘ring-fencing’, or ‘moving liabilities’, the practical result is the same: ordinary Pakistanis keep paying for mistakes they did not make, through squeezed public budgets, inflationary financing and the endless national ritual of finding money for failure before finding money for schools, hospitals or water. When people say, ‘Stop whining, privatisation stops the bleeding’, the citizen’s reply is simple: the bleeding stopped for the airline’s balance sheet. The taxpayer is still haemorrhaging. This interest alone, which every Pakistani taxpayer will bear, is more than three times the Rs10 billion up-front cash the government actually receives from the sale.
With that context in place, we can address the most viral critique: ‘sold for the price of one aircraft’. This is a meme, not a valuation, and certainly not a statement of fact. The loudest social media refrain is always the same: ‘PIA has planes; planes have value; therefore, the sale price is theft’. This collapses the moment you remember one detail that ruins viral arithmetic: most aircraft in an airline fleet are not owned. They’re leased. In the operational snapshot commonly discussed around the transaction, PIA has about 18 aircraft in active service, with roughly 12 leased and only six owned. Leased aircraft are not treasure you can liquidate. They are contracts. And contracts come with rentals, maintenance reserves, insurance, redelivery conditions and penalties.
So no, you can’t value an airline by adding up ‘used A320 prices’. A leased A320 isn’t an asset in the way a car is an asset; it’s more like a Netflix subscription where the ‘movie’ costs $300,000 a month and you’re legally obligated to keep the TV on even if you’re not in the room. An airline’s equity is what remains after leases, payables, operational risk and management credibility are priced in. That is precisely why the state carved out liabilities first. And to make the deal work, the government recently granted an 18 per cent GST exemption that will apply to leased aircraft. This was a hidden ‘subsidy’ to the privatisation deal; without it, the lease rentals would have made the airline unbuyable for any
private consortium.
Then comes the heart of the argument: the sale price, the reinvestment story, and the theatre of numbers. One side shouts, ‘Look at the price!’ Another side replies, ‘Price doesn’t matter; it’s about investment!’ Both can be wrong at the same time. Capex or recap is not purchase price. Promised investment is not consideration. Blending them together is how people manufacture a triumph out of arithmetic.
As for the sale itself, the headline deal discussed is 75 per cent sold for Rs135 billion after a competitive auction, against a reserve price of Rs100 billion. The structure also included a widely discussed rule that 92.5 per cent of the bid proceeds would be ploughed back into the airline, leaving 7.5 per cent as direct fiscal proceeds. Separately, it has been described that the government receives about Rs10 billion up front, while retaining 25 per cent with an indicated value around Rs45 billion.
Either way, a realistic and more significant takeaway is this: Rs135 billion is a headline, not a fiscal win. Once you net out the reinvestment structure and the legacy burden, the state is not realising a windfall, even if the bottomless pit has finally been sealed; the taxpayer remains the main financier of the clean-up.
Next, the question that invites cheap conclusions, and deserves a more honest one, is why foreign investors didn’t show up with confetti. Some people treat the lack of foreign bidders as a single, neat verdict: ‘Pakistan is uninvestable’. The reality is messier. Aviation has its own special category of risk, and Pakistan adds a layer of uncertainty that is difficult to price. Foreign strategic buyers don’t mind risk. They mind unpriceable risk. In an environment where rules can change mid-flight, most investors who are not entrenched in the system won’t even taxi to the runway. Therefore, Pakistan’s problem isn’t that foreign investors can’t do maths. It’s that they can’t do astrology.
Despite all the moral discomfort, selling PIA was still the least-bad option. And with an IMF programme in place and lender conditionality tightening the fiscal room for manoeuvre, the government had little choice but to proceed. For years, PIA has been used as a patronage machine and a political prop, and then treated as an ‘emergency’ only when the bill comes due. Successive governments did not ‘inherit’ this mess. They cultivated it, protected it and used it. The only way out was to socialise the losses and sell the shell. If privatisation genuinely imposes hard budget constraints, professional management and an end to ‘just one more bailout’. it can stop future losses from compounding. That is a real gain. Not glamorous, but real.
Which is why any pragmatic discussion should end by spelling out what the public needs to watch next. Will fresh capital actually go into operations quickly? Will political interference truly stop, or will it return through the back door? What happens to staffing and efficiency after any initial employee-protection period ends? Will the airline’s strategy focus on profitability, or on symbolism and patronage? Will the taxpayer’s ongoing debt-service burden be transparently reported year after year? Will aviation regulation become credible and stable, or remain improvisational? With a private consortium, composed of reputable, professional businesspeople, there is reason for cautious optimism, and the public can also play a vital role in supporting these objectives.
And finally, the punchline, delivered with respect. So yes, it’s better to stop the bleeding than let it continue. But here is the citizen’s perspective: the bleeding only stopped for the airline. The taxpayer is still haemorrhaging. Support privatisation as a necessary step forward, if you must. Just don’t insult the public by pretending it came cheap, or that the bill is being paid by anyone other than ordinary Pakistanis.
A government has to earn the right to lead by having the courage to tell people the truth, not by selling a narrative out of fear of what opponents might exploit. If the public can handle fuel queues, inflation and tax hikes, it can handle honest arithmetic too. Transparency is the only way to build trust, educate citizens and make reform politically durable. When you level with your people, you make the state stronger.
The writer is an entrepreneur living in the United States and the United Kingdom. He can be reached at: [email protected]
