ISLAMABAD : Monitoring Desk – The Arif Habib Group-led consortium has emerged as the highest bidder in the privatisation of Pakistan International Airlines (PIA), placing a record-breaking bid of Rs135 billion in the final round of open bidding.
The government has facilitated the bidder by shifting the backlog of loans and liabilities of more than 650 Billion pkr to PIA Holding Company. The bidders will have to pay PKr 10 Billion only. First administrative act of the winner is to relieve the corporation from unnecessary burden of employees who were appointed on political basis.
People Unity and Air League are big worker unions in PIA representing PPP and PMLN. Both parties recruited a large number of their workers in PIA in the past. 4000 were appointed between 2008 and 2013. Then and now, both times, center ruled by both parties.
The second-highest bid came from the Lucky Group consortium, which offered Rs134 billion, setting the stage for one of the most competitive privatisation exercises in Pakistan’s aviation history.
The final round of open bidding saw Arif Habib outpaced Lucky Cement Group, securing the country’s first major airline privatisation in nearly two decades. The Lucky Cement Limited-led consortium comprised power producer Hub Power Holdings Limited, Kohat Cement Company Limited KOHC, and investment firm Metro Ventures.
The privatisation process attracted multiple bidders, including a consortium of four companies—Arif Habib, fertiliser maker Fatima Fertiliser Company Limited, private school network City Schools and real estate firm Lake City Holdings Limited.
Fauji Fertiliser Company Ltd, earlier viewed as a leading contender for the 75% stake in PIA, had last week formally withdrawn from the privatisation bidding. FFC later joined Arif Habib Consortium.
Finance Minister Muhammad Aurangzeb remarked that whoever emerged successful in the bidding process, the ultimate victory would be Pakistan’s.
Addressing the ceremony, the finance minister highlighted that all bidders participating in the privatisation process were Pakistani, describing it as a “major and encouraging development” for the country’s investment climate.
Ashraf Malkham of Geo News shared , government officials have said that of the amount paid for the 75% stake, 92.5% of the proceeds will be invested directly into PIA, while the remaining 7.5% — amounting to Rs10.12 billion — will be transferred to the federal government.
The government-retained 25% stake has been termed a valuable asset, and successful bidders will have the option to acquire it at a later stage or allow it to remain with the state, according to the privatisation framework.
Hum News reported , in the two previous rounds, the Arif Habib consortium had consistently led the bidding, with Rs121 billion and Rs116 billion bids in the first and second rounds, respectively, demonstrating strong investor interest in Pakistan’s national carrier.
The government of Pakistan had set a minimum reserve price of Rs100 billion for the sale, aiming to open new avenues for private investment while reducing the financial burden of PIA, which has long been operating under government ownership.
According to the privatisation framework, the successful bidder will acquire a controlling 75 per cent stake in PIA, with the option to purchase the remaining 25 per cent from the government within a stipulated timeframe. The deal is expected to bring much-needed reforms to the airline and improve its operational and financial efficiency.
The historic sale marks the government’s second attempt at privatising PIA after last year’s effort failed due to insufficient bids. Analysts say the successful bid by the Arif Habib consortium could pave the way for a turnaround in the airline’s fortunes and help eliminate years of losses borne by the national exchequer.
Chairman of the Privatisation Commission, Muhammad Ali, said the process is part of the government’s policy to open new investment avenues. “Two consortiums have expressed interest in acquiring 100 per cent and 75 per cent of the shares,” he added.
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This marks the second attempt by the current government to privatise PIA. Last year, the process failed when only one bid of Rs10 billion was submitted against a reserve price of Rs85 billion.
Currently, the government holds approximately 96 per cent of PIA, which has historically been a loss-making entity under state ownership. Analysts note that the sale is expected to relieve the national exchequer from annual losses incurred in running the airline.
Under the privatisation framework, 75 per cent of PIA’s shares will be sold initially, with the successful bidder given the option to acquire the remaining 25 per cent within 90 days. Two-thirds of the proceeds from the 75 per cent stake must be paid within 90 days, with the balance payable over a year. Of the total proceeds, the government will directly receive only 7.5 per cent, while the remainder will be reinvested in PIA to improve its fleet and operational performance.
Experts say the privatisation could prevent billions of rupees in annual losses that the government had been covering for PIA. The airline’s market value has improved, with equity moving from a negative Rs45 billion last year to Rs30 billion following the transfer of liabilities. The successful bidder will also benefit from exemptions on an 18 per cent general sales tax on aircraft leases, and certain tax liabilities will be transferred to the holding company.
Ashraf Malkham reported , the government has assured 12 months of job security for PIA employees. Pension liabilities, medical benefits, and other post-retirement perks will be handled by the holding company, while current salaries and benefits will be paid by the new owners.
PIA currently has rights to 78 destinations and holds about 170 landing slots worldwide.
Officials said the airline urgently needs fresh investment and professional management to turn around its operations.
Last year, the government set a minimum price of $305 million for a 60% stake, but received a single bid of $36 million from real estate developer Blue World City, which declined to raise its offer, citing concerns over PIA’s finances and “significant leakages”.
