By Staff Reporter
ISLAMABAD: Pakistan has cleared four parties, including prominent business groups and a military-backed conglomerate, to bid for a controlling stake in Pakistan International Airlines (PIA), advancing a high-stakes privatization tied to a $7 billion International Monetary Fund bailout.
The approval, announced by the Privatisation Commission on Tuesday, is a pivotal move in the government’s effort to shed loss-making state enterprises, a key IMF demand to stabilise an economy buckling under $130 billion in external debt.
The decision clears the way for a consortium of industrial heavyweights, Lucky Cement, Hub Power Holdings, Kohat Cement, and Metro Ventures, to bid for a 51-100 percent stake in PIA. Another contender is a group led by investment firm Arif Habib Corp, joined by fertilizer maker Fatima Fertiliser, private education provider The City School, and real estate developer Lake City Holdings. Fauji Fertiliser Company, a military-linked conglomerate, and domestic airline Airblue round out the approved bidders.
“The pre-qualified parties will now proceed to the buy-side due diligence phase,” Privatisation Minister Muhammad Ali said in a statement from his ministry. The review process is slated to span two to two-and-a-half months, with final bidding and negotiations expected in the fourth quarter of 2025.
The sale, if completed, would be Pakistan’s first major privatization in nearly two decades, a litmus test for the government’s ability to overhaul a state sector long weighed down by inefficiency and political interference. PIA, 96 percent owned by the state through PIA Holding Company Limited, has racked up over $2.5 billion in losses over the past decade, battered by mismanagement, and operational woes.
Once a jewel of Asian aviation, the carrier has become a symbol of the fiscal strain inflicted by Pakistan’s state-owned enterprises.
Yet glimmers of a turnaround have emerged. In the fiscal year ending June 2024, PIA posted its first operating profit in 21 years, a feat driven by a sweeping restructuring effort. The government now aims to capitalize on that momentum, seeking to divest a controlling stake to raise funds and meet IMF demands for fiscal discipline and structural reform.
But the road ahead is fraught with challenges. A previous attempt to privatize PIA last year fizzled when the sole bidder, the Blue World City consortium, offered just Rs10 billion for a 60 percent stake, far below the Privatisation Commission’s floor price of Rs85.03 billion. That flop underscored the difficulty of attracting serious buyers for an airline saddled with debt and a tarnished reputation.
With four parties now in the ring, the focus shifts to the due diligence phase, where bidders will pore over PIA’s books and operations to assess its value and risks. The outcome of that process, and the final bids expected next year, will determine whether this latest effort can succeed where past attempts faltered. A successful sale could signal to investors and creditors that Pakistan is serious about reform, potentially unlocking further support.
In a related move, the Cabinet Committee on Privatisation approved the transaction structure for the Roosevelt Hotel, a PIA-owned property in New York. “Out of the three options evaluated by the financial advisor, including outright sale, joint venture with multiple options, and long-term lease, the Joint Venture model with multiple options has been approved,” the privatization ministry said.
The approach is designed to “maximize long-term value for the country, while ensuring flexibility, multiple exit opportunities, and minimizing future fiscal exposure.” Pakistan anticipates an initial payment exceeding $100 million from the deal this year.
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