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Arif Habib Consortium Wins 75% Stake in PIA for Rs135 Billion

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Arif Habib Consortium Wins 75% Stake in PIA for Rs135 Billion

Pakistan has taken an important step in its economic reform plan by selling 75% of Pakistan International Airlines (PIA) to an Arif Habib–led consortium for Rs135 billion.
This deal aims to stop years of losses at the national airline and bring in private-sector management.

The winning consortium includes:

  • Arif Habib Corporation Limited
  • Fatima Fertiliser Company Limited
  • City Schools (Private) Limited
  • Lake City Holdings (Private) Limited

Out of the total amount, the government will receive around Rs10.12 billion in cash, while most of the money will go back into PIA to support its operations and future growth.

How the bidding worked

The Privatisation Commission ran a two-round auction for the 75% stake in PIA.

In the first round:

  • Lucky Consortium offered Rs101.5 billion
  • Air Blue–Arif Habib Limited consortium offered Rs26.5 billion
  • Arif Habib consortium gave the highest offer of Rs115 billion

The government had already set a minimum expected price of Rs100 billion, so the process moved to a second round between the highest bidders.

In the final round:

  • Arif Habib consortium made the top bid of Rs135 billion
  • Lucky Consortium closely followed with Rs134 billion and congratulated the winner

The Privatisation Commission highlighted that the bids were opened in front of the media to keep the process open and transparent.

What the deal means for PIA

Under the approved structure:

  • Investors get 75% of PIA’s shares and management control
  • About 92.5% of the sale proceeds will be reinvested into PIA
  • Around 7.5% of the proceeds will go directly to the Government of Pakistan
  • The government will still hold a 25% stake, which the new owners may be allowed to buy later

According to PIA’s business plan, the airline currently has 18 aircraft, and the new owners hope to double the fleet in 3–4 years if the turnaround plan works.

Why PIA needed privatisation

PIA has been facing serious financial problems for many years.
The airline is estimated to have lost about Rs800 billion over the last two decades, putting heavy pressure on public finances.

Past governments tried several times to fix PIA but could not achieve a lasting solution while it stayed fully under state control.
The airline’s debt, weak finances, and operational issues made it very hard to run profitably.

Business and market experts have said that selling PIA at too low a price would be politically unpopular, while demanding too high a price would scare away investors.
The final winning bid of Rs135 billion shows that strong local business groups still see value in the airline if it is managed properly.

Link to wider economic reforms

The PIA sale is part of the broader economic agenda of Prime Minister Shehbaz Sharif’s government.
The main goals are to:

  • Reduce losses from state-owned enterprises (SOEs)
  • Improve efficiency, service quality, and governance by bringing in private management
  • Meet commitments under the IMF programme, which calls for reform of loss-making public companies

The Privatisation Commission says the process follows all legal rules and aims to build public trust through transparency and documentation.

Several business leaders have also stressed that whoever takes control of PIA must make sure Pakistan as a whole benefits by improving the airline’s performance and image.

Previous failed attempt and fresh interest

This successful sale comes after an earlier attempt to privatise PIA failed.
In that earlier process:

  • Blue World City consortium was the only bidder
  • It offered just Rs10 billion for a 60% stake, far below the minimum price of Rs85.03 billion set by the Privatisation Commission

Because the offer was too low, the government cancelled the process.

To restart, the government issued a new Expression of Interest (EOI) in April and extended the deadline to attract more serious bidders.
This time, several strong groups participated, and competition pushed the final price much higher.

What happens next

Now that the Arif Habib consortium has won the 75% stake, the focus will move from bidding to execution and management.
Key priorities will include:

  • Improving routes, load factors, and on-time performance
  • Investing in fleet expansion and better customer service
  • Restructuring debt and improving cash flows
  • Strengthening governance, reporting, and professional management practices

If the new management team is successful, PIA could become a case study for future privatisations in Pakistan.
It may also help rebuild investor confidence, support long-term economic growth, and reduce the burden of loss-making SOEs on the national budget.