The federal government has approved the full privatisation of Pakistan International Airlines (PIA), deciding to offload its entire 100% stake after potential bidders made it clear they did not want any government involvement in the airline’s affairs following the sale. The move marks a significant shift from earlier plans and is aimed at attracting serious investors ahead of the bidding scheduled for December 23.
Under the revised structure, bidding will initially take place for 75% of PIA’s shares. The winning bidder will then be given the option to acquire the remaining 25% stake within one month at a price 12% higher than the bid value. This premium reflects the option to defer payment for up to one year rather than paying the full amount upfront. Previously, the government had planned to sell only a 60% stake, but that proposal failed to generate meaningful interest.
In another major change, the government will receive just 7.5% of the bid amount in cash, while the remaining 92.5% will be invested directly into PIA. Officials say this approach is designed to strengthen the airline’s balance sheet and support its long-term revival, rather than diverting funds to the national exchequer. During an earlier failed privatisation attempt, bidders were required to pay 15% of the bid value in cash.
Advisor to the Prime Minister on Privatisation, Muhammad Ali, confirmed the updated plan, explaining that most bidders demanded at least a 75% shareholding to ensure operational control, while some pushed for complete ownership. He said the government’s primary objective is to restore PIA’s financial health and operational strength, which will require substantial investment in fleet renewal, aircraft acquisition, and restructuring.
PIA has struggled for years due to mismanagement and financial strain, leaving it in need of massive capital injection. To make the airline more attractive, the government last year transferred Rs654 billion of PIA’s debt to a separate holding company, with taxpayers now servicing those liabilities. For the current fiscal year, the airline is set to receive Rs34.7 billion from the federal budget to cover debt servicing, pensions, and medical expenses.
Despite this relief, the new owners will still be responsible for around Rs26 billion in outstanding tax and airport-related dues, along with foreign lease payments and aviation service charges. However, officials note that PIA’s equity position has improved to a positive Rs30 billion, aircraft lease sales tax has been waived, and key international routes have been restored.
Several major business groups are participating in the bidding process, including the Lucky Cement Consortium, Arif Habib Consortium, Fauji Fertiliser, and Air Blue. PIA’s valuable landing slots at major international airports, particularly London Heathrow, along with air service agreements with 97 countries, remain among its most prized assets. While the government has offered legal and financial indemnities to ease investor concerns, successful bidders have been cautioned that dividend payouts may take time as the airline stabilises.