- Three bids received for national carrier in televised auction.
- Auction follows last year’s failed attempt due to low bid.
- PIA’s prospects improve with debt assumption, lifted bans.
The Arif Habib Corporation Limited–led consortium acquired a majority stake in Pakistan International Airlines (PIA) with the highest bid of Rs135 billion in an auction held for the privatisation process of the national flag carrier on Tuesday.
Arif Habib raised its bid from Rs115 billion to Rs135 billion after the Lucky Cement Limited–led consortium increased its earlier bid of Rs101.5 billion to Rs134 billion in the second round of the open-bidding.
Arif Habib and Lucky Cement consortia advanced to the open auction stage after placing offers above the reference price of Rs100 billion, while private airliner Airblue exited the bidding after submitting an offer of Rs26.5 billion.
In the first round of the open auction, Lucky Cement submitted a bid of Rs115.5 billion, surpassing Arif Habib’s opening offer by Rs500 million.
The round concluded with Arif Habib increasing its bid to Rs121 billion, while Lucky Cement closed the session with an offer of Rs120.25 billion.
The organisers then announced a 30-minute recess at the request of Lucky Cement.
Before the break, Finance Minister Muhammad Aurangzeb remarked that whoever emerged successful in the bidding process, the ultimate victory would be Pakistan’s.
Addressing the ceremony, the finance minister highlighted that all bidders participating in the privatisation process were Pakistani, describing it as a “major and encouraging development” for the country’s investment climate.
“All the bidders today are from Pakistan, which is a significant milestone. The country’s largest and most seasoned business groups are competing for the national airline, which will be led by experienced Pakistani investors,” Aurangzeb said.
He added that the bidding process would indirectly promote foreign investment by boosting investor confidence and underscoring Pakistan’s commitment to transparent economic reforms.
The session, which resumed with a base price of Rs125 billion, concluded with Arif Habib securing a 75% majority stake in PIA with a winning bid of Rs135 billion.
The Lucky Cement Limited-led consortium comprised power producer Hub Power Holdings Limited, Kohat Cement Company Limited KOHC, and investment firm Metro Ventures.
The Arif Habib consortium included fertiliser maker Fatima Fertiliser Company Limited, private school network City Schools and real estate firm Lake City Holdings Limited.
Meanwhile, government officials have said that of the amount paid for the 75% stake, 92.5% of the proceeds will be invested directly into PIA, while the remaining 7.5% — amounting to Rs10.12 billion — will be transferred to the federal government.
The government-retained 25% stake has been termed a valuable asset, and successful bidders will have the option to acquire it at a later stage or allow it to remain with the state, according to the privatisation framework.
Arif Habib, the chief of Arif Habib Group, described the development as the “triumph of Pakistan”.
He maintained that the PIA privatisation would help boost investment in the country, adding that it would also attract foreign investment in Pakistan.
The businessman lauded the government for successfully conducting the bidding process, saying the Privatisation Commission completed the entire process in a transparent manner.
“We will work hard to make this airline great again,” he added.
Prime Minister Shehbaz Sharif congratulated the nation on the privatisation of the national flag carrier, saying the government’s promise of privatising state entities was “being fulfilled”.
In a statement, the premier said that the PIA’s privatisation would further stabilise the country’s economy and restore investors’ confidence.
He lauded Deputy Prime Minister Ishaq Dar and Chief of Army Staff and Chief of Defence Forces Field Marshal Syed Asim Munir in this regard.
PM Shehbaz added that the government was committed to working with the private sector for development and the public welfare.
‘Majority of bid amount for improving PIA’
Speaking before the open bidding, Adviser to the Prime Minister on Privatisation Muhammad Ali said that privatisation of the national flag carrier was part of the government’s reform agenda.
“Government’s aim is not to sell the national airline but to make it stand on its own feet,” he added.
Ali said that the privatisation of PIA will bring investment to the country, adding that the government wanted to revive the past glory of the airline.
He said the government had decided to privatise between 51% and 100% of the national airline’s shares, adding that some bidders had expressed interest in acquiring a 75% stake.
He further explained that bidders would be allowed to make payments in phases, with two-thirds of the amount payable upfront and the remaining one-third at a later stage.
The adviser added that bidders have also been permitted to include up to two additional parties after the bidding process is completed.
The auction is Pakistan’s second televised attempt at selling the once storied flag carrier after a bungled process last year drew only a solitary bid that fell far below the government’s reference price, derailing what would have been Pakistan’s first major privatisation in nearly two decades.
Today’s ceremony saw sealed bids submitted by bidders at 10:30am during a live broadcast, while the bids were opened in a ceremony starting at 4:30pm.
Fauji Fertiliser Company Ltd, earlier viewed as a leading contender for the 75% stake in PIA, had last week formally withdrawn from the privatisation bidding.
Officials had said the structure was designed to accommodate bidders interested in either 75% or full ownership. Those who do not participate in the bidding cannot later join the winning consortium, a restriction that no longer applies to Fauji Fertiliser now that it has formally withdrawn.
Under the payment terms, the winning bidder must pay two-thirds of the bid amount within 90 days, while the remaining one-third can be paid within 12 months.
The government has assured 12 months of job security for PIA employees. Pension liabilities, medical benefits, and other post-retirement perks will be handled by the holding company, while current salaries and benefits will be paid by the new owners.
PIA currently has rights to 78 destinations and holds about 170 landing slots worldwide. Officials said the airline urgently needs fresh investment and professional management to turn around its operations.
Last year, the government set a minimum price of $305 million for a 60% stake, but received a single bid of $36 million from real estate developer Blue World City, which declined to raise its offer, citing concerns over PIA’s finances and “significant leakages”.
PIA’s prospects have since improved. Islamabad has assumed most of the airline’s legacy debt, the carrier has posted its first pre-tax profit in two decades, and Britain and the European Union have lifted a five-year ban that had cut PIA off from its most lucrative routes.
The reopening of those routes could materially lift revenues and support a higher valuation than in last year’s failed auction, analysts and government officials have said.
The airline’s sale forms part of a broader privatisation push under Pakistan’s IMF bailout, which also includes plans to offload stakes in state-owned banks, power distribution companies and other loss-making enterprises as the government seeks to curb fiscal drain and restore investor confidence.
