Arif Habib Consortium Wins Bid for 75% Stake in Pakistan International Airlines

In a landmark development for Pakistan’s economic reforms, the Arif Habib Consortium emerged victorious in the televised auction for a controlling 75% stake in Pakistan International Airlines (PIA), the country’s loss-making national flag carrier. The winning bid stood at Rs135 billion, outpacing rival Lucky Cement Consortium’s final offer of Rs134 billion in a competitive open auction phase.

The successful privatization marks Pakistan’s first major state asset sale in nearly two decades and fulfills a key condition under the International Monetary Fund’s $7 billion bailout program, aimed at reducing fiscal burdens from underperforming public enterprises.

The auction, broadcast live for transparency, unfolded in two phases at a ceremony in Islamabad.

In the sealed bids morning phase, Arif Habib Consortium submitted Rs115 billion as the highest, Lucky Cement Consortium offered Rs101.5 billion, and Air Blue (Private) Ltd. bid Rs26.5 billion, which was eliminated for falling below the reference price.

The reference price was set at Rs100 billion, approved by the Privatisation Commission Board and Cabinet Committee on Privatisation.

The open auction phase was triggered as two bids exceeded the reference. Starting from a base of Rs115 billion with minimum increments of Rs250 million, bids escalated rapidly: Lucky Cement raised to Rs120.25 billion and then higher, while Arif Habib countered repeatedly, securing the win at Rs135 billion.

Privatisation Adviser Muhammad Ali described the process as a “major milestone,” emphasizing its role in attracting investment and reviving the airline. Prime Minister Shehbaz Sharif praised the transparency, noting the live broadcast and public participation.

The deal allows the winner to acquire the remaining 25% government stake later at a 15% premium, potentially leading to full ownership. 92.5% of sale proceeds will be reinvested directly into PIA for fleet expansion, operational improvements, and growth. Only 7.5% goes to the national treasury. The buyer must commit additional investments, estimated at Rs80 billion over five years, to stabilize and expand operations. PIA’s current fleet of 18 aircraft is projected to double within 3-4 years under a pre-approved business plan. Employee job security is guaranteed for one year post-privatization.

PIA has faced chronic losses, overstaffing, an aging fleet, and massive debt (previously around Rs654 billion, most now absorbed by a government holding company). A 2024 privatization attempt failed with a single low bid.

Key enablers for this success include government assumption of legacy liabilities, waiver of 18% sales tax on aircraft leases, lifting of EU and UK bans to reopen lucrative European routes, and PIA posting its first pre-tax profit in two decades this year.

Four groups were initially pre-qualified, but Fauji Fertiliser Company withdrew last week, leaving three bidders.

The Arif Habib Consortium, known for investments in finance, energy, and real estate, is expected to focus on restructuring and long-term value creation.

Final cabinet approval and transaction closure are anticipated soon, paving the way for PIA’s potential revival as a competitive global carrier. Analysts view the outcome positively, signaling renewed investor confidence in Pakistan’s reform agenda.