Pakistan targets April for handover of PIA to new private owners

Dubai: Pakistan expects private management to take charge of Pakistan International Airlines (PIA) by April 2026 after a consortium led by Arif Habib Corporation won a 75% stake in a competitive auction, advancing efforts to reduce losses at state-owned firms.

The group bid Rs135 billion ($482 million), exceeding the government’s Rs100 billion reserve price and valuing the airline at about Rs180 billion including the state’s remaining 25% holding. The winning consortium includes Fatima, City Schools and Lake City Holdings, with space for as many as two additional partners that meet eligibility criteria, including a foreign airline.

Privatisation adviser Muhammad Ali said the structure ensures new capital flows into the airline and avoids a change of ownership without operational strengthening. He said the government expects to collect around Rs10 billion upfront while most funds are injected into PIA to support its turnaround plan.

Approvals, workforce retention

The transaction requires endorsement from the Privatisation Commission board and the cabinet. Contract signing is expected soon after approvals, followed by financial close within 90 days as regulatory requirements are met. Ali said fallback safeguards allow the government to approach the second-highest bidder if closing conditions are not fulfilled.

The consortium must retain the airline’s employees for 12 months with no changes to contracts. Ali said staffing levels have fallen in recent years through voluntary separations, easing operational costs while maintaining continuity.

He said allowing additional partners strengthens financing capacity and could broaden access to aviation expertise, supporting plans to rebuild international operations and service quality.

Signals of reform momentum

Prime Minister Shehbaz Sharif on Wednesday described the completed auction as a significant moment for the country’s reform programme. He said delays in earlier attempts had burdened public finances and that the finalised bidding framework delivered the transparency needed to proceed.

Sharif said he met potential bidders to resolve procedural concerns and keep the December 23 deadline on track. Officials say steady execution raised confidence in future transactions and provided new momentum for divestments.

The government plans to use fiscal space created by reduced losses to prioritise development spending and strengthen national finances.

Route permissions, investment needs

Defence Minister Khawaja Asif said restructuring has supported the restoration of access to international destinations. PIA currently flies to Manchester and holds permissions for service to Birmingham, London and New York, alongside multiple European cities.

He said limited aircraft availability constrains operations, making new investment central to expanding the route network and regaining key markets.

Officials say annual losses before restructuring were about Rs35 billion, and that the transaction model preserves value through capital injections while the state retains a 25% stake.

Future transactions under review

Asif said decades of accumulated losses across state-owned enterprises underline the need for privatisation to stabilise public finances. He said continued reforms will determine progress toward wider divestments once PIA’s handover is complete.

Government plans show future transactions are being prepared, with attention on sectors where persistent losses weigh on national resources and limit investment capacity.