Pakistan on Tuesday completed the privatisation of its national airline, Pakistan International Airlines (PIA), selling it for PKR 13,500 crore (Rs 4,300 crore) after a competitive bidding process held in its capital, Islamabad. The government was forced to privatise the flag-carrier PIA after the International Monetary Fund (IMF) linked loans to fiscal prudence and divestment of assets. The Arif Habib Group emerged as the highest bidder among the three pre-qualified bidders.
The sale marks a major step by the government to exit the loss-making airline after years of financial trouble and failed revival plans. The divestment of PIA stakes is Pakistan's first major privatisation effort in two decades, according to the Dawn.
The privatisation ceremony was held in Islamabad and was attended by all three pre-qualified bidders -- Lucky Cement, private airline Airblue and investment firm Arif Habib.
Each of the bidders deposited their sealed bids into a transparent box, as part of the formal process.
"The successful privatisation of PIA marks a historic milestone. Congratulations to the Arif Habib Group on this achievement. This milestone reflects the vision of Prime Minister Shehbaz Sharif for reforming state enterprises, restoring PIA’s glory, and making air travel accessible and reliable for all Pakistanis and international travellers," said Ishaq Dar, Deputy Prime Minister and Foreign Minister of Pakistan.
"I had the privilege of supporting this process through chairing the Cabinet Committee on Privatisation. I commend the Privatisation Commission for conducting a professional, transparent, and highly competitive process, and thank the Federal Government and Field Marshal Syed Asim Munir, for their full support in successfully concluding the transition," he added.
When the bids were opened in the second phase of the ceremony, Arif Habib emerged as the highest bidder with an initial offer of PKR 115 billion, which is about Rs 3,680 crore. Lucky Cement followed with a bid of PKR 105.5 billion, or around Rs 3,376 crore, while Airblue placed a much lower bid of PKR 26.5 billion, translating to roughly Rs 848 crore.
After the bids were revealed, the government announced a reference price of PKR 100 billion, equivalent to about Rs 3,200 crore. As per the rules of the auction, the two highest bidders, Arif Habib and Lucky Cement, were invited to take part in an open auction.
Both groups then raised their bids in stages. The competition continued until the Arif Habib group offered PKR 135 billion, or about Rs 4,320 crore. This bid was not matched by Lucky Cement, which decided to step back from the process.
“We congratulate Arif Habib group,” a member of the Lucky Cement team said while withdrawing from the bidding after the final offer.
The government had initially offered a 75% stake in Pakistan International Airlines. Under the terms of the deal, the successful bidder will have 90 days to purchase the remaining 25% shares of the airline.
According to the rules, 92.5% of the money raised from the sale of the initial 75% stake will go directly to the airline for reinvestment. The remaining 7.5% of the proceeds will be transferred to the government.
In addition to the purchase price, the investor will be required to commit PKR 80 billion in fresh investment over the next five years, which works out to about Rs 2,560 crore. This investment is expected to be used to improve operations, fleet quality and overall services.
Earlier, the government had taken responsibility for PIA’s liabilities, which stood at PKR 654 billion last year, or roughly Rs 20,928 crore. This step was seen as key to making the airline attractive to potential buyers.
The entire bidding process was broadcast live on Pakistani television channels to ensure transparency. Officials said this was done to build public trust in the privatisation exercise.
This was the second attempt by the government to sell the airline. An earlier effort last year failed after bids did not meet the expected price.
The PIA divestment is crucial for Pakistan as it takes loans to refinance loans. The $7-billion loan programme of the IMF for Pakistan was approved in September 2024. While $1 billion was given immediately, the rest of the money was to be disbursed over a period of 3 years. Fiscal reforms were attached as loan conditions by the IMF.
Earlier in the day, Prime Minister Shehbaz Sharif, while addressing a meeting of the federal cabinet, thanked government officials and the Privatisation Commission for their role in completing the sale. He said the process was transparent and described it as the largest transaction of its kind in Pakistan’s history.
Pakistan International Airlines was once counted among the leading airlines in the world. Over the years, however, poor management, rising losses and weak service quality damaged its reputation and finances. The continued decline left the government with little choice but to sell the airline.
Source: India Today