Government Sells 75% Stake in PIA to Arif Habib-Led Consortium in Landmark Privatisation Deal

December 24, 2025 —

The federal government on Tuesday completed the privatisation of Pakistan International Airlines (PIA) by selling a 75% stake to a consortium led by business tycoon Arif Habib, marking the country’s first successful major privatisation transaction in nearly 20 years.

The Arif Habib led group, comprising Arif Habib, Fawad Ahmed Mukhtar, Gohar Ejaz, and Aqeel Karim Dhedhi, emerged as the highest bidder with an offer of Rs135 billion during the 13th round of open auction, defeating a rival consortium headed by Muhammad Ali Tabba. Another bidder, Air Blue, was disqualified after submitting an offer of Rs26.5 billion, well below the government’s minimum price of Rs100 billion.

Out of the total bid amount, the government will receive Rs10.1 billion in cash, while the remaining funds will be injected into PIA as investment, according to Muhammad Ali, Adviser to the Prime Minister on Privatisation. The transaction represents the second attempt to privatise PIA within a year and the first successful divestment since the sale of K-Electric in 2005.

To facilitate the deal, the government absorbed approximately Rs670 billion of PIA’s liabilities, which will now be borne by taxpayers. For the current fiscal year alone, debt servicing costs are estimated at Rs35 billion and are expected to continue for at least six years. Additionally, the government offered multiple incentives, including tax credits worth Rs36 billion, exemption from 18% sales tax on aircraft leasing, and extended timelines to clear liabilities owed to the Federal Board of Revenue (FBR) and the Civil Aviation Authority (CAA).

Under the agreement, the winning consortium must deposit two-thirds of the bid amount within three months, with the remaining balance payable within one year. The government will retain shares equivalent to one-third of the price until all dues are cleared. The consortium also has the option to acquire the remaining 25% stake at a 12% premium within three months and may induct new partners, including a potential international airline. Officials have indicated that Fauji Fertilizer may join as an additional partner.

The government aims to see PIA operating at least 40 functional aircraft within four years and increase annual passenger volume from 4 million to 7 million. Currently, PIA operates only 18 aircraft out of a fleet of 34. Arif Habib stated that plans are underway to add 18 more aircraft and expand the fleet to 64, subject to traffic demand.

The new owner is barred from laying off employees for one year, while medical and certain legacy liabilities of PIA employees have been transferred to a holding company and will be serviced by the government. PIA currently employs around 6,900 permanent staff and 2,900 contractual workers.

Prime Minister Shehbaz Sharif welcomed the transaction, calling it a strong vote of confidence in Pakistan’s economy and future. He stated that regardless of which consortium succeeded, Pakistan remained the ultimate beneficiary of the privatisation process.

The successful sale of PIA is expected to pave the way for privatising other state-owned enterprises and help restore investor confidence amid Pakistan’s challenging economic environment.