PIA takes flight again

December 24, 2025 (MLN): After nearly two decades of stalled reforms and failed divestment attempts, Pakistan’s long-delayed privatisation agenda appears to have found its footing.

A consortium led by Arif Habib Corporation Limited (AHCL) has emerged as the Highest Ranked Bidder for Pakistan International Airlines Corporation Limited (PIACL) with a Rs135 billion offer for a 75% equity stake.

According to the set terms of this transaction, 7.5% (Rs10.125 billion) of the bid amount will be received by the Government of Pakistan through PIAHCL.

The remaining 92.5% (Rs124.875 billion) will be invested in PIACL in the form of new equity via a Rights Issue in two tranches: two-thirds as an upfront payment (Rs83.25 billion) and one-third as the second tranche (Rs41.625 billion), to be invested within 12 months of Financial Close.

According to a regulatory disclosure issued following the bidding process held on December 23, 2025, the AHCL-led consortium, comprising Fatima Fertilizer Company Limited, Lake City Holdings (Private) Limited, AKD Group Holdings (Private) Limited and City Schools (Private) Limited, submitted a bid that significantly exceeded market expectations of Rs80–100 billion.

The bid remains subject to approvals from the Board of the Privatisation Commission and the Federal Cabinet, after which a Letter of Acceptance will be issued to formally declare the successful bidder.

The bid reflects a reassessment of PIA’s underlying commercial value, anchored in its global landing rights across more than 78 destinations and 170 airport slots, as well as its status as the national carrier of the world’s fifth-most populous country.

Topline Securities noted that the potential turnaround of PIA had been identified in its Strategy 2026 outlook as a key catalyst for improved market sentiment.

In its view, a successful closure of the transaction could boost confidence within the privatisation ministry and set the tone for upcoming divestments, including power distribution companies (DISCOs).

Adding further context, Khurram Schehzad, Adviser to the Finance Minister, said that beyond the Rs10 billion initial inflow, the Government of Pakistan’s remaining 25% stake is valued at approximately Rs45 billion, based on the implied valuation of around Rs180 billion.

This takes the government’s total value realization to at least Rs55 billion.

The outcome marks a sharp reversal from November 2024, when the Privatisation Commission’s Board rejected a sole Rs10 billion bid for a 60% stake in PIACL, deeming it inadequate and revisiting options for early privatisation.

The improved outcome has been attributed to a structural overhaul ahead of the sale, which involved carving out more than Rs600 billion in legacy debt and pension liabilities into a separate holding company, effectively presenting PIA to investors as a clean, debt-lite entity with positive equity.

Commenting on the development, Mohammed Sohail, CEO of Topline Securities, described the transaction as Pakistan’s first major privatisation in 19 years, calling it a turning point for fiscal credibility and investor confidence.

He said that years of losses from state-owned enterprises had constrained Pakistan’s fiscal space and limited social spending, adding that the higher-than-expected bid sends a strong signal about the government’s seriousness in addressing public-sector inefficiencies.

“The state’s role is to regulate and enable, not to operate commercial enterprises,” he said, noting that past privatisations have largely delivered value to both the government and consumers.

The bidding process was conducted live from Islamabad, marking one of the most closely watched privatisation events in recent years.

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