Pakistan government on Tuesday concluded the sale of a 75% stake in its national carrier, Pakistan International Airlines (PIA), for Rs135 billion, giving an end to years of stalled efforts to privatise the loss-making airline.
Arif Habib consortium bought the managing stake in the national carrier.
The consortium is comprised of Arif Habib Corporation Limited, Fatima Fertilizer Company Limited, City Schools (Private) Limited, and Lake City Holdings (Private) Limited.
- Pakistan government will get Rs10.12 billion in cash out of Rs135 billion. The rest of the amount will be invested in the PIA.
Earlier, the second round of auction for the divestment of a 75% stake in the PIA began on Tuesday, with two out of three qualified parties submitting the bid above the minimum expected price of Rs100 billion.
The bid opening was initially scheduled for 3:30pm, but was delayed and eventually began at 4:30pm.
In the first round:
- Lucky consortium offered Rs101.5 billion for 75% stake in PIA
- Air Blue consortium submitted a bid of Rs26.5 billion
- Arif Habib consortium submitted a bid of Rs115 billion
The minimum expected price set by the government was Rs100 billion.
This took the auction into the second phase that commenced with a base price of Rs100 billion.
Arif Habib consortium and Lucky consortium took part in the second round, in which the earlier came up with the highest bid of Rs135 billion. Lucky consortium congratulated Arif Habib consortium after placing their last bid of Rs134 billion.
Pakistan government will get Rs10.12 billion in cash out of Rs135 billion. The rest of the amount will be invested in the PIA.
Earlier, the Privatisation Commission Board presented recommendations for the reference price for the 75% stake.
The reference price was then submitted to the Cabinet Committee on Privatisation (CCOP) for approval, after which the federal cabinet formally endorsed it.
Three consortia submitted their sealed bids to acquire control of the national flag carrier.
The authorised representative of the Lucky consortium submitted its bid first, followed by representatives of the Air Blue–Arif Habib Limited consortium, respectively.
“Today’s PIA bidding is built on transparency, efficiency, and responsibility—supporting fairness, accountability, and public trust through a clear process,” the Privatisation Commission said earlier on Tuesday.
“The received bids will be opened in front of the media,” said PC Chairman Muhammad Ali, in a video message on Tuesday.
“If more than one bid is higher than the reference price, then there will be an open auction,” he added.
The bidding attracted attention both nationally and among business observers. Dr Gohar Ejaz, a prominent businessperson, said on social media, “Whoever wins today must ensure that Pakistan wins and brings back PIA to its glory. The Privatisation Commission has made a great effort to bring the best business groups to bid for 75% ownership and management of PIA.”
Highlighting the airline’s financial struggles, Ejaz noted, “PIA has lost Rs800 billion over the last 20 years.”
Ali Khizar, Director Research at media, stressed the delicate balance the government must navigate, saying: “The key is the reserve price of PIA. Under Rs100 billion is a politically difficult decision, and over Rs100 billion is a commercially difficult decision”.
Meawhile, the bidders in the race are: 1) A consortium comprising Lucky Cement Limited, Hub Power Holdings Limited, and Kohat Cement Company Limited, 2) Metro Ventures (Private) Limited, a consortium comprising Arif Habib Corporation Limited, Fatima Fertiliser Company Limited, City Schools (Private) Limited, and 3) Lake City Holdings (Private) Limited and Air Blue (Private) Limited.
The Fauji Foundation withdrew from the bidding process to acquire PIA, leaving three bidders in the race ahead of the submission and opening of bids.
According to the Privatisation Commission, a 75% stake will be offered in the bidding process. From this 75%, 92.5% of the proceeds will go into the company, while the remaining 7.5% will go to the government.
Under the current structure, 92.5% of proceeds are reinvested into the company
The government will retain the remaining 25% stake, with the successful bidder given the option to acquire it later. Based on the PIA business plan, the fleet of 18 aircraft is projected to double within 3–4 years, according to the commission.
“The privatisation of PIA is being undertaken as part of Prime Minister Muhammad Shehbaz Sharif’s economic reform agenda. Government of Pakistan is firmly committed to ensuring a credible, open and authentic privatisation process in accordance with all rules & regulations,” said the commission.
The government’s previous attempt to sell the national carrier collapsed last year amid weak investor interest and unresolved financial challenges.
Blue World City consortium, the only bidder, refused to match the minimum expectation of the Privatisation Commission of Rs85.03 billion and stuck to its original offer of Rs10 billion for a 60% stake in the PIA, ending the bidding process of the national flag carrier’s privatisation.
The government restarted the PIA sale process with a fresh EOI call in April this year, marking a renewed effort to offload its stake in the national carrier. It first set June 3 as the deadline for EOI submission, but later extended it till June 19.
It has been seeking to sell the debt-ridden carrier, to raise funds and reform cash-draining state-owned enterprises as envisaged under a $7 billion International Monetary Fund programme (IMF).
American Dollar Exchange Rate