The government on Wednesday defended the privatisation of Pakistan International Airlines (PIA), saying the Rs135 billion bid submitted by the Arif Habib Corporation Limited–led consortium would generate a total economic value of Rs55 billion for the exchequer, amid criticism and competing narratives surrounding the transaction.
Addressing the media at PTV Headquarters, Adviser to the Prime Minister on Privatisation Muhammad Ali, and Federal Minister for Information Attaullah Tarar, highlighted the rationale and structure of the privatisation deal.
“The goal of privatisation is that the private sector is best suited to run these businesses; it is not the government’s job. The investment by the private sector will bring in new aircraft and improve the airline services,” he said.
Congratulating the Arif Habib Corporation Limited-led consortium, which also included Metro Ventures (Private) Limited, Fatima Fertiliser Company Limited and City Schools (Private) Limited, Ali lauded the role of Prime Minister Shehbaz Sharif, Field Marshal Asim Munir and government officials involved in the privatisation process.
“The army chief played an important role in this process,” said Ali.
PIA privatisation: Arif Habib-led consortium awaits cabinet nod after Rs135bn offer
A consortium led by AHCL on Tuesday emerged as the winning bidder for the acquisition of a 75% stake in PIA, submitting a top bid of Rs135 billion, which was well above the government’s initial minimum price of Rs100 billion and the base price of Rs115 billion, at which the auction began.
Ali shared that after the bidding process, the total value of PIA stands at Rs180 billion, i.e. Rs45 billion is the value of the 25% government stake.
“If the buyer purchases this stake, the government will receive Rs45 billion. So the total economic value of the PIA transaction for the government is Rs55 billion,” he said.
According to the set terms of this transaction, 7.5% (Rs10.125 billion) of the bid amount will be received by the Government of Pakistan through PIAHCL. The remaining 92.5% (Rs124.875 billion) of the bid amount will be invested in PIACL in the form of new equity via ‘Rights Issue’ in two tranches, i.e. two-thirds as an upfront payment (Rs83.25 billion) and one-third as the second tranche (Rs41.625 billion) to be invested within 12 months of financial close.
Meanwhile, the adviser clarified that properties of PIA are not part of this deal.
Sharing PIA operational details, Ali said that the airline currently serves 30 destinations, while PIA has rights as a designated airline for 78 countries and has air service agreements with 97 countries. “PIA’s biggest asset is its landing rights,” he said
Currently, the airline has 33 aircraft, including 16 A-320, 12 Boeing 777 and 5 ATR, but only 19 remain in operation, with a domestic market share of nearly 30%.
Ali said that some elements are deliberately distorting the narrative over PIA privatisation. “They are saying that we have sold PIA for Rs10 billion. However, they clearly know that the government is getting Rs55 billion value,” he said.
The minister shared that the government is transferring liabilities to the tune of Rs180 billion. “However, no long-term debt is being transferred.”
Citing examples of different countries, Ali said one needs to be financially and managerially strong to run an airline.
The adviser said that the government has provided incentives to the buyer, including GST exemption, no new taxes or levies or surcharges to be levied on airline operations.
Ali admitted that PIA’s performance has deteriorated in the last 15 years. “From 2015-2024, PIA incurred losses to the tune of Rs500 billion,” he said.
New capital will help ‘resolve PIA’s problems,’ says Arif Habib
The adviser shared that the airline industry contributes only 1.6% to Pakistan’s GDP, which is low. “With a meagre share of only 0.3%, the aviation industry is also not contributing towards employment in Pakistan,” he said.
“PIA has the capacity and capability to become a full-service network carrier,” he said. “Whereas, more investment can be brought in as there is no long-term debt.”
“We have given a positive balance sheet to the buyer… PIA will go back to its glory days,” said Ali.
