By Staff Reporter
ISLAMABAD: The government will seek fresh expressions of interest for the sale of Pakistan International Airlines (PIA) later this month, a move spurred by the national carrier’s first annual profit in over two decades, signaling a potential turning point in the country’s long-stalled privatization efforts.
The renewed push to offload a 51 percent to 100 percent stake in the debt-ridden airline comes as part of Islamabad’s broader strategy to raise funds and reform loss-making state-owned enterprises (SOEs), a cornerstone of the $7 billion International Monetary Fund (IMF) program approved last year.
Prime Minister Shehbaz Sharif has pledged to divest all SOEs, with PIA at the forefront of this ambitious agenda.
A previous attempt to privatize PIA last year faltered, drawing only one bid that fell significantly below the government’s asking price of more than $300 million.
Bidders at the time cited concerns over taxation and the airline’s bloated balance sheet. Since then, Pakistani authorities have offloaded nearly all of PIA’s legacy debt onto government books and implemented sweeping reforms to make the carrier more appealing to investors.
“In our last attempt to privatise PIA, pre-qualified bidders had some issues with taxation and the balance sheet. Those are taken care of now,” Muhammad Ali, government adviser on privatisation, told Reuters in an interview. “We plan to publish the new Expression of Interest (EoI) by the last week of April 2025.”
The government aims to finalize the airline’s privatization before the end of this year, Ali said. To sweeten the deal, officials are revising the pre-qualification criteria and may adjust the reference price based on PIA’s latest financial accounts, which now reflect a leaner and more competitive operation.
The government had appointed Jones Lang LaSalle to advise on exploring different sales options for the PIA-owned Roosevelt hotel building in Manhattan, New York. They include selling the building as it is or opting for a joint venture with a top tier developer, which has the potential to generate proceeds five times higher, Ali said.
The catalyst for this renewed optimism is PIA’s financial turnaround. This week, the airline reported operational earnings of Rs9.2 billion for the year ended December 2024, culminating in a net profit of Rs26.2 billion — its first since 2003. For years, PIA had relied on government bailouts as debt-servicing costs devoured its operational revenue, with the carrier facing threats of shutdown, plane impoundments, and flight cancellations due to unpaid bills.
“This landmark operational profit of 26 billion rupees fundamentally strengthens PIA’s position in the context of the government’s privatization plan,” PIA CEO Amir Hayat told Arab News in a written response to questions. . “It demonstrates the inherent value and turnaround potential of the airline, making it a significantly more attractive proposition for potential investors.”
He said the results would positively influence investor confidence and potentially lead to a “more favorable valuation” during the privatization process.
“Key drivers include maintaining strict financial discipline by implementing stringent cost control measures across the board, scrutinizing every expense, creating operational efficiencies in every aspect of flight operations, reducing ground times, and enhancing fuel efficiency,” he added.
Other measures included route optimization by curtailing non-productive routes and capitalizing on profitable ones, and revenue enhancement by creating opportunities in neglected segments such as cargo, ancillary sales and codeshares and alliance partnerships.
“We view this profit not as a one-off anomaly, but as the foundational result of deep, structural changes within the airline,” Hayat added.
While the aviation industry remained vulnerable to external variables like fuel prices and geopolitical factors, PIA had developed internal mechanisms that provided a “strong basis for continued positive performance.”
“Our clear intent and strategy are geared toward maintaining profitability moving forward and our budget for 2025 is already planned on net profitability,” the PIA CEO said.
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