PIA posts first half-year profit in two decades ahead of privatization push

By Staff Reporter

KARACHI: Pakistan International Airlines (PIA), the country’s state-owned carrier, reported its first pre-tax profit for the first half of a year since 2004, a milestone that bolsters Islamabad’s efforts to privatise the airline as part of a $7 billion International Monetary Fund bailout agreement.

The turnaround, driven by reduced finance costs after government intervention, comes as PIA prepares for a sale expected later this year, marking Pakistan’s first major privatisation in nearly two decades.

The airline, housed under PIA Holding Company, recorded a pre-tax profit of Rs11.5 billion for the six months through June, a stark contrast to the loss it posted in the same period last year, according to financial disclosures. Net profit for the half-year reached Rs6.8 billion. A source confirmed to Reuters that the this was PIA’s first pre-tax profit for the January-June period since 2004. Financial records prior to 2014 are no longer available on the airline’s or the Pakistan Stock Exchange’s websites, limiting historical comparisons.

The profit marks a rare bright spot for PIA, which has long grappled with high fuel and service costs, negative equity, and operational challenges. Last year, the carrier eked out an annual profit through deferred tax adjustments, but the first-half 2025 result signals a more sustainable improvement. A decisive factor was Islamabad’s move to absorb roughly 80% of PIA’s legacy debt in 2024, significantly lowering finance costs, though the airline’s equity remains in negative territory, underscoring the fragility of its recovery.

The financial upturn arrives at a critical juncture as Pakistan presses forward with plans to divest PIA, a key condition of the IMF bailout secured last year. The sale, if completed, would be the country’s first major privatization since the early 2000s, aligning with the government’s broader strategy to offload loss-making state enterprises. A previous attempt to privatize PIA collapsed in 2024 after only one bidder submitted an offer deemed too low, but the government has since attracted interest from five domestic groups, including Airblue Ltd., Lucky Cement Ltd., Arif Habib Corp., and Fauji Fertilizer Co. Final bids are expected in the coming months.

“The government is committed to ensuring a transparent and competitive process,” a finance ministry official said last month, declining to comment further on the ongoing privatization efforts. The sale is seen as a litmus test for Pakistan’s ability to execute structural reforms amid economic pressures, including a ballooning fiscal deficit and rising external debt obligations.

PIA’s prospects have also been buoyed by Britain’s decision in July to lift a five-year ban on Pakistani airlines, imposed after a fatal 2020 crash and a subsequent pilot licensing scandal. The move, which followed the European Union’s lifting of a similar restriction late last year, allows PIA to reapply for routes to London, Manchester, and Birmingham, among its most lucrative destinations. The airline previously estimated an annual revenue loss of about Rs40 billion from the UK ban, a significant hit to its top line.

The restoration of these routes could provide a critical lifeline as PIA seeks to stabilize its finances ahead of the planned sale. However, challenges persist, including high operating costs and the need for fleet modernization. Industry analysts caution that while the profit is a positive signal, PIA’s negative equity and reliance on government support highlight the long road to sustainable profitability.