PIA sale at Rs135 billion: What the winning bidder is expected to gain

By Our Correspondent

LAHORE — Pakistan International Airlines (PIA) has been sold for Rs135 billion in a competitive privatization bid, marking a critical step in the government’s efforts to reform the national carrier and attract private investment. The Arif Habib consortium emerged as the winning bidder for a 75% stake in the airline.

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The transaction transfers control of the airline’s core operations, including its fleet, airport slots, passenger services, and related infrastructure, to the winning bidder. This setup provides the investor with immediate operational capacity and the ability to pursue revenue streams from passenger flights, cargo operations, and aviation related services. The airline’s established brand name and bilateral route rights are expected to be strategic commercial assets.

A key factor that made the deal viable for investors has been the restructuring of PIA’s liabilities. Prior to the auction, Pakistan’s government implemented a Scheme of Arrangement under which many of PIA’s non core assets and legacy liabilities were transferred to the newly formed PIA Holding Company Limited. This legal restructuring was sanctioned by the Securities and Exchange Commission of Pakistan, enabling a cleaner balance sheet for the airline unit being sold.

As a result of this restructuring, the privatized aviation entity being acquired by the winning bidder does not carry the bulk of historical debt otherwise associated with PIA’s operations. The holding company now manages the majority of non core liabilities, helping to make the airline’s core business more attractive to potential investors.

Under the terms of the privatization, the government retains a 25% stake, while the winning bidder holds management control of the airline. The buyer also has the option to acquire the remaining government stake within a defined period under agreed conditions.

Analysts say the investor’s opportunity lies in turning around operations, optimizing routes, and leveraging PIA’s international network, particularly with recent improvements in financial performance and route access. These developments include the airline’s first annual profit in decades and regained flights to key European destinations, both contributing to a more favorable investment climate ahead of the sale.