Arif Habib Consortium submits bid for remaining 25% of PIA

April 28, 2026 (MLN): A consortium led by Arif Habib has submitted a bid to acquire the government’s remaining 25% stake in Pakistan International Airlines Corporation Limited, as the April 28 deadline for final offers lapsed.

The move follows the group’s earlier agreement to acquire a 75% controlling stake in the national carrier for Rs135 billion, implying a total equity valuation of around Rs180bn.

Based on this benchmark, the residual 25% stake is estimated to be worth approximately Rs45bn, potentially taking the consortium’s total commitment to Rs180bn.

The latest development signals the consortium’s intent to consolidate ownership of the airline, which has long been a fiscal burden on the state but remains strategically valuable due to its international landing rights and market access.

The transaction builds on a landmark privatisation process that gained traction in December 2025, when the Habib-led group emerged as the highest bidder, significantly exceeding earlier market expectations.

The deal structure included a mix of direct government proceeds and fresh capital injection into the airline via a rights issue, aimed at funding operational revival.

However, the acquisition comes with mounting operational challenges. Speaking earlier, Arif Habib warned that persistently high jet fuel prices could render the airline’s operations “unsustainable.”

This indicates the sector’s exposure to global oil volatility and domestic pricing distortions.

Fuel costs, which typically account for 30–40% of airline operating expenses, have surged sharply, with local pricing dynamics further amplifying the impact.

In a price-sensitive market like Pakistan, passing on higher costs risks eroding demand, complicating turnaround efforts.

While his remarks highlight genuine industry pressures, they also carry policy implications. Analysts note that such public signaling from a controlling stakeholder may be aimed at securing targeted relief, particularly in aviation fuel pricing, where cross-subsidization currently places a heavier burden on sectors deemed non-essential.

The government, meanwhile, faces limited fiscal space under an IMF-supported framework, constraining its ability to extend sector-specific subsidies.

With Rs69bn already absorbed in fuel-related support, additional concessions could test reform commitments.

Beyond fuel pricing, structural inefficiencies including high taxation, energy constraints, and legacy operational issues, continue to weigh on the airline’s recovery prospects.

The consortium has indicated plans for fleet rationalization and cost optimization, though the scale of required reforms remains significant.

Market participants are closely watching the outcome of the 25% stake bid, which, if successful, would mark a decisive shift toward full private control of the airline.

The development is also seen as a broader test case for Pakistan’s privatisation agenda, with implications for investor confidence and future divestments of state-owned enterprises.

The outcome remains subject to regulatory approvals and government acceptance.

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