New management to take control of PIA by April 2026
Pakistan
International Airlines (PIA) is expected to come under new ownership by April
2026, alongside an infusion of fresh capital, following a breakthrough deal to privatize
the national flag carrier, Pakistan’s privatization chief said on Wednesday.
A consortium led by Arif Habib Corporation emerged as the
highest bidder in a live-televised auction on Tuesday, securing a 75% stake in
PIA. The winning bid of Rs135 billion exceeded the government’s reserve price
of Rs100 billion, marking a sharp turnaround from a failed privatization
attempt last year.
Adviser to the Prime Minister on Privatisation,
Muhammad Ali, told Reuters that the government anticipates the new owners will
take over airline operations by April next year. The deal is now moving toward
final approvals from the Privatisation Commission board and the federal
cabinet, expected within days, with contract signing likely within two weeks.
Read More Privatization
of PIA completed with 75% stake sold to Arif Habib consortium
Financial close is projected within 90 days,
subject to the completion of regulatory and legal requirements.
Under the agreement, the government will
receive Rs10 billion in upfront cash while retaining a 25% stake in PIA, valued
at around Rs45 billion. Ali said the structure of the deal prioritises
injecting capital into the airline rather than merely transferring ownership.
“We wanted to avoid a scenario where the
government sells the airline, takes the money, and the company still
collapses,” he said.
In addition to Arif Habib Corporation, the
winning consortium includes fertiliser producer Fatima, private education
network City School, and real estate firm Lake City Holdings Limited. Ali noted
that although Fauji Fertiliser Company did not participate in the bidding, it
could still join the consortium as a partner. The buyer is permitted to add up
to two partners, including a foreign airline, provided they meet eligibility
criteria.
He said bringing in additional partners could
strengthen the airline financially and introduce international aviation
expertise.
IMF
scrutiny
Ali added that safeguards in the agreement —
including retained earnest money and an additional payment at signing — would allow
the government to turn to the second-highest bidder if the deal does not close.
Read More Employees
vow to resist privatization of Pakistan International Airlines (PIA)
On labour conditions, he said the buyer is
required to retain all existing employees for at least 12 months following the
transaction, with no changes to contracts. He noted that PIA’s workforce has
already been reduced in recent years.
The privatisation is being closely monitored
by the International Monetary Fund (IMF), which has urged Pakistan to stem
losses at state-owned enterprises. Ali described the PIA sale as a critical
test of Pakistan’s reform credibility with the IMF, warning that failure to
divest loss-making entities could intensify pressure on public finances.
Successfully
closing the deal, he said, would demonstrate progress on economic reforms and
pave the way for further privatisations in the pipeline.
Source:
Express Tribune