PIA Privatization: Can it Bring Back Pakistan National Airline's Glory Days?

by Riaz Haq

on Thursday

After decades of failed attempts, the Government of Pakistan has finally privatized the Pakistan International Airline (PIA) under intense pressure from the International Monetary Fund (IMF). Nonetheless, it is a deal that will give the national airline not only a chance to survive but to thrive in the long run. As part of structuring the sale for Rs. 135 billion, the government has assumed Rs. 654 billion in debt and pension obligations. The government gets only Rs. 10 billion in cash but it gives the new owners a clean balance sheet in return for a commitment to invest Rs. 125 billion of the Rs. 135 billion sale price in the carrier. 

PIA Privatization Deal Structure. Source: Standard Capital Securities Pvt Ltd.

Pakistani politicians have used state-owned enterprises like the PIA as a vehicle for doling out political patronage. They have given jobs, including top jobs, to political cronies who have neither the experience nor the inclination to run these PSUs like businesses. Their focus has been on extracting as much financial gains as possible, and sharing some of these gains with their political patrons. 

Privatization will save Pakistan’s taxpayers tens of billions of rupees each year, and raise the prospect of the PIA becoming a contributor rather than a continuous drain on the national  treasury. Prior experience with privatizations of state-owned units like banks and the telecom company has shown that this is a realistic expectation. Taxpayer money saved can be used to fund education, healthcare and critical infrastructure. 

The PIA has a huge potential to succeed as an airline business. It has lucrative routes and landing rights which it is currently unable to fully utilize. It has a small aging fleet of 32 aircraft. Half of the fleet is out of service at any given time due to maintenance issues. 

Arif Habib, the head of the buying consortium which was advised by New York-based Seabury Aviation Partners, has committed to hiring a professional management team to run the PIA as a business to serve its customers and shareholders. He has announced plans to grow the PIA fleet from around 15-18 operational aircraft to 38 in the first phase, then potentially reaching 64-65 aircraft within a few years, essential for reclaiming international routes and improving service by adding more planes and restoring operational strength. 

Pakistan has the world's 6th largest diaspora. In addition, millions of Pakistanis travel for Hajj and Umrah pilgrimage to Saudi Arabia each year. Majority of the overseas Pakistanis and pilgrims would choose to travel by PIA if it offered convenient schedules and better service with direct flights to Pakistan. 

A successful national airline can make a significant contribution to the nation's economy by improving connectivity for tourism, trade and investment in the country. Business people, in particular, value their time.  Operating direct, non-stop flights to destinations in Pakistan from major international airports are essential for serving this customer base. 

Related Links:

Haq's Musings

South Asia Investor Review

Pakistan Air Travel Market

Pakistan $20 Billion Tourism Industry Booming

Saving PIA, Railways and Education in Pakistan

Pakistan: Political Patronage Trumps Public Policy

Riaz Haq's Youtube Channel

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  • Riaz Haq

    PIA’s new owners in Arif Habib Consortium used the services of Seabury Aviation Partners Consulting. New York based Seabury advises clients on airline valuation, restructuring and financing:

    Fleet and Balance Sheet Restructuring ~ Business Planning ~ Operations Restructuring ~ Liquidity and Cash Management, Liability Management

    Debt & Equity Capital Raising ~ M&A ~ Restructuring ~ Capital Structure Optimization ~ Liability Management ~ Board Advisory

    New Aircraft and Engine Evaluations ~ New Aircraft and Engine Negotiations ~ New vs Used Aircraft Analysis ~ Engine Lifecycle Costs ~ Aircraft Leasing and Financing

    Commercial Strategy: Network & Revenue ~ Fleet Strategy ~ Partnering & M&A strategy ~ Cost / Operations Optimization: Maintenance, Cargo, Labor / Workforce, Ancillary Businesses ~ Business Planning

    Carnegie Hall Tower, 53rd Floor
    152 West 57th Street
    New York, NY 10019

    https://seaburyaviation.com/


    —————————

    Watch Consortium Member Gohar Ejaz talk about the process

    https://youtu.be/KVIWR3dT1Lg?si=C5Y44ocvenX1pG2V

    Pakistan International Airlines has officially entered a new chapter after being sold in one of the most consequential privatisation deals in Pakistan’s history.

    In this exclusive episode of On My Radar, Kamran Khan is joined by Gohar Ejaz, Chairman Lake City Holdings, former Commerce and Industries Minister, and a core member of the Arif Habib Consortium that secured PIA with a landmark Rs135 billion bid.

    Speaking directly from the inside, Gohar Ejaz shares never-heard-before details of how the winning consortium built its strategy, how it decisively defeated the powerful Lucky Group, and what the future holds for Pakistan’s national airline.

    The conversation dives deep into the vision for reviving PIA, investor confidence, operational reforms, and why this privatisation could reshape Pakistan’s aviation sector for decades.

    23 hours ago

  • Riaz Haq

    AI Overview
    Muhammad Ali, the Prime Minister's Adviser on Privatisation, is the key government figure publicly advising on Pakistan International Airlines (PIA) privatization, while a consortium led by Ernst & Young (including Bauer Aviation Advisory, Haidermota & Co, Freshfield Bruckhaus Deringer, Nutshell, and Knight Frank) serves as the lead financial advisor for the entire process
    . The government is selling 51% of PIA to a consortium led by Arif Habib Corporation, aiming to complete the transition by April 2026, after years of stalled attempts. 
    Key Advisors & Figures
    • Muhammad Ali: PM's Adviser on Privatisation, handling public communication and strategy.
    • Ernst & Young-led Consortium: The main advisor guiding the transaction structure, legal separation, and valuation.
    • Abdul Aleem Khan: Federal Minister for Privatisation, overseeing the process. 
    The Deal & Process
    • A consortium led by Arif Habib Corporation won the bid for a 75% stake in PIA.
    • The government retains a 25% stake, with assets like the NYC & Paris hotels excluded from the sale.
    • The privatization aims to turn around the loss-making airline, with new owners expected to take over by April. 
    Key Financials
    • The government expects to receive approximately PKR 55 billion in value, not just the initial cash injection. 
    This effort marks a significant step in Pakistan's privatization drive, following failed attempts in the past. 

    22 hours ago

  • Riaz Haq

    AI Overview
    Yes, the Lucky Group, as part of a consortium bidding for Pakistan International Airlines (PIA), engaged
    Pegasus Airlines (Turkey's low-cost carrier) as their technical aviation advisor to help with the complex privatization process, alongside other bidders like the Arif Habib consortium who used Seabury Aviation Partners, highlighting a move towards expert consultation in the sale of the struggling national airline. 
    Key Details:
    • Role of Pegasus Airlines: Pegasus provided technical guidance and expertise on aviation strategy and operations, helping the Lucky Group navigate the PIA privatization bid.
    • Part of a Bidding War: The Lucky Group was a serious contender alongside the Arif Habib consortium in the race to acquire PIA, with both groups leveraging international aviation consultants.
    • Government Goal: This privatization is part of Pakistan's economic reforms, aiming to revive PIA, which has faced decades of financial struggles, noted The Telegraph and Reuters.
    • Outcome: Ultimately, the Arif Habib Consortium won the bid in December 2025, acquiring a 75% stake in PIA. 

    21 hours ago