Pakistan International Airlines goes private after USD 482m bid
Following years of financial strain, Pakistan has finalized the majority sale of its national carrier to the Arif Habib Group.
The Arif Habib consortium acquired a 75% stake in Pakistan International Airlines (PIA) for PKR 135 billion following a public auction in Islamabad. The final bid exceeded the PKR 100 billion reference price set by the government of Pakistan, as reported by Pakistan Today. The winning group, comprising Arif Habib Corporation Limited, Fatima Fertiliser, City Schools, and Lake City Holdings, outbid the Lucky Cement consortium, which submitted a final offer of PKR 134 billion.
The bidding process began with a floor price of PKR 115.25 billion, established by the Arif Habib group’s initial proposal. During the session, Air Blue was eliminated after offering PKR 26.5 billion, failing to meet the Cabinet Committee on Privatization (CCOP) minimum requirements. Under the terms of the agreement, the winning consortium holds an option to purchase the remaining 25% of the state carrier within 90 days.
The transaction requires the buyer to deposit two-thirds of the total amount within 90 days, with the final third due in one year. Labor clauses prohibit staff layoffs for the first year and protect the pensions and benefits of the current 6,500 employees.
Muhammad Ali confirmed to Pakistan Today that "bidders can add a maximum of two more entities to their consortium after winning the bid," allowing for potential partnerships with international airlines or local groups such as the Fauji Foundation.
The asset transfer excludes real estate and non-core holdings, enabling the new management to focus strictly on flight operations. PIA maintains air service agreements with 97 countries and landing rights in over 170 locations. The airline's remaining debt of PKR 26 billion will be settled over five years, while the majority of its legacy liabilities, totaling PKR 825 billion, were previously transferred to a state-owned holding company.
Despite historical financial challenges, including negative operating cash flows between 2017 and 2022, the privatization aims to leverage PIA's foreign currency revenue potential. The airline reported annual finance costs of PKR 60.2 billion in 2024. The government previously renegotiated interest rates with commercial lenders, a move contingent on completing this privatization before 2027.
Over the past year, PIA has begun rebuilding its network to Europe after EASA removed the country from its blacklist in 2020 following a scandal involving fake pilot licences. PIA currently flies from Islamabad to Paris-CDG and Manchester twice a week. The medium- and long-haul network is complemented by Toronto, Kuala Lumpur and Beijing. In the Middle East, its network reaches 14 destinations and, domestically, it operates in 13 cities. The company hopes to return to the United States with flights to Chicago and New York.
Translated with DeepL.com (free version)
PIA fleet consists of 17 Airbus A320s (average age 16.5 years), 9 Boeing 777-300ERs (18 years old), 6 B777-200ERs (20.8 years old), 2 B777-200LRs (19.8 years old) and 3 ATR 42-500s (19.1 years old).
