KARACHI – Arif Habib Consortium officially won open bidding to acquire Pakistan International Airlines (PIA), with staggering Rs135 billion bid. The announcement marks government’s second major attempt at privatizing the national carrier, and this time, the stakes have never been higher.
The highly anticipated privatization event unfolded live, pitting two major consortia against each other in a tense bidding war. The first bid, opened by the Lucky Group, stunned observers at 101.5 billion. Airblue, Pakistan’s private airline, had earlier submitted 26.5 billion. Meanwhile, the Arif Habib Consortium initially threw down 115 billion, already the highest at that stage. But the real fireworks came in the open bidding finale, where Arif Habib surged to 135 billion, cementing their victory.
Who’s Behind the Consortium?
Arif Habib Consortium is a powerhouse mix of leading Pakistani companies:
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Arif Habib Limited
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Fatima Fertilizer
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City School
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Lake City Holdings
The victorious bid secures 75% of PIA’s shares, with the winning group having the option to purchase the remaining 25% within 90 days. Under the privatization framework, only 7.5% of the sale proceeds go directly to the government, with the rest reinvested in PIA to modernize fleets and improve operations.
Just a year ago, the privatization effort spectacularly failed, only a single bid of PKR 10 billion was submitted, far below the government’s minimum threshold of 85 billion. Experts say the turnaround this year is due to a clean balance sheet: PIA’s equity has swung from a negative 45 billion to a positive 30 billion after the government absorbed massive debts. Additionally, the successful bidder will benefit from tax exemptions on aircraft leases and a partial transfer of PIA’s tax liabilities.
PIA’s recent profitability stunned everyone as airline reported 26.2 billion in net profit for FY2024, a stunning reversal from a 75 billion loss in 2023. Analysts point out that much of this “profit” was made possible because the government absorbed over 650 billion in debts, including interest payments. Nevertheless, operational margins exceeding 12% place PIA on par with some of the world’s top airlines.
PIA currently operates 38 aircraft, with only 18 active, and holds landing rights at 78 airports worldwide, including London, Paris, and Canada (U.S. operations remain banned). The airline’s workforce has been downsized from 11,500 to about 6,500 employees. Post-privatization, job security is guaranteed for one year, with voluntary exits expected thereafter. Retired staff pensions and benefits will continue to be honored by PIA Holding Company.
However, certain lucrative assets like PIA-owned hotels in New York and Paris are excluded from the transaction. Only operational divisions, cargo, passenger services, kitchens, and training facilities are part of the privatization package.
Experts argue that privatization will free the government from annual losses running into billions of rupees, as historically, PIA’s operations have drained the national treasury. While the government will see only a small fraction of immediate cash (7.5%), the strategic shift ensures PIA becomes a profit-generating airline without continuous taxpayer support.
With this historic deal, Pakistan may finally see PIA transformed from a perennial loss-making entity into a globally competitive airline. Bloomberg highlights that this privatization, coupled with operational reforms, marks a pivotal turning point — PIA is now officially back in the profit column after 21 long years.
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