PIA Sold for Rs135 Billion: How Pakistan's Flag Carrier Went Private

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The short version

On 23 December 2025, in a televised auction in Islamabad, a group of Pakistani investors led by Arif Habib bought 75 percent of Pakistan International Airlines for Rs135 billion. A year earlier, the government had tried to sell the same airline and received one bid of Rs10 billion. It turned that offer down.

So what changed in twelve months? Not the planes. Mostly the paperwork. This is the story of how a famous airline lost its way, why the first sale failed, and why the second one worked.

An airline that taught others to fly

For older Pakistanis, PIA was a source of pride. It flew its first overseas route, Karachi to London, in 1955. In 1960 it became the first Asian airline to fly jet aircraft, with the Boeing 707. In 1962 a PIA Boeing 720 set a speed record between London and Karachi. In 1985 PIA helped a new airline in Dubai get off the ground. That airline was Emirates.

The decline came slowly and then all at once. Reports over the years point to the same mix: political appointments, too many staff for too few planes, a fleet that aged without replacement, and debt that grew every year. Arab News reported that PIA's accumulated losses had passed $2.8 billion by the time of the sale. Economist Khaqan Najeeb told Dawn the airline had at times lost between Rs50 billion and Rs100 billion a year.

Then came 2020. After a scandal over questionable pilot licences, the European Union, the United Kingdom and the United States banned PIA from flying to them. Europe and the UK later lifted their bans. The US ban was still in place at the time of the sale.

Why the first sale failed

In 2024 the government put PIA up for sale. The auction collapsed. Defence Minister Khawaja Asif later said the only bid was Rs10 billion, far below what the government was willing to accept.

The problem was easy to see in the ledger. A buyer would not just get aeroplanes and landing rights. They would also get decades of debts, pension promises and old liabilities. No serious investor wanted to pay for that.

What changed before the second sale

Before trying again, the government moved the heaviest baggage out of the airline. Dawn reported that around Rs650 billion of old liabilities were parked in a separate state holding company, and a further Rs33 billion was taken off PIA's balance sheet. The holding company also keeps PIA's famous hotels, the Roosevelt in New York and the Scribe in Paris, which were not part of the deal, according to The News.

The deal was also designed so that most of the money would stay inside the airline rather than go to the treasury. That made it far more attractive to buyers who wanted to grow the business, not just own it.

The auction

Three groups bid on the day. In the first round, Lucky Cement offered Rs101.5 billion, Airblue Rs26.5 billion and the Arif Habib consortium Rs115 billion, according to Dawn. The government then revealed its reference price of Rs100 billion, and Airblue dropped out.

In the second round the two remaining bidders raised in steps. Lucky Cement reached Rs134 billion. Arif Habib answered with Rs135 billion, and Lucky Cement withdrew. Arif Habib told reporters the adviser's valuation was Rs131 billion and called the extra Rs4 billion an "entry premium."

Where the Rs135 billion goes

This is the part most headlines missed. According to The News, only about Rs10.1 billion of the price goes to the government. The other Rs124.9 billion is put back into PIA as fresh capital. Arab News reported that the new owners committed to invest up to Rs125 billion, including in new aircraft.

So the sale was less about raising cash for the state and more about stopping the bleeding. Officials said the government would no longer have to fund the airline.

The deal also gave the buyers 90 days to take the remaining 25 percent. They did. In April 2026, Profit reported, the consortium deposited a Rs45 billion bank guarantee to buy the government's last shares, with a year to pay at 12 percent annual interest. After that transaction the owners were Arif Habib Corporation and Fatima Fertilizer together at 34.1 percent, Fauji Fertilizer at 34 percent, Lake City Holdings at 14 percent, AKD Group at 10.25 percent and City School at 7.65 percent.

On 29 June 2026, management was formally handed over to the new owners, and PIA said the Rs125 billion equity injection had fully capitalised the airline.

What the new owners promised

At the time of the sale PIA had 18 aircraft and carried about 4 million passengers a year. Arab News reported plans for 38 aircraft in the first phase and 65 later, with passengers rising to 7 million within four years. By April 2026 the consortium had set a more ambitious target of 50 aircraft by September 2026, up from 21 flying at the time. We will update this story when the airline publishes its fleet figures.

For staff, the deal promised no layoffs for at least a year, with pay and benefits unchanged. Pensions and post retirement benefits stay with the state holding company.

What the ledger teaches

PIA did not become sellable because it suddenly became profitable. It became sellable because the government separated the airline from its past. Buyers paid for a clean business with planes, routes and a famous name, and left the old debts with the state.

That is also the uncomfortable part. The Rs650 billion in the holding company did not disappear. Najeeb estimated taxpayers would keep paying around Rs30 billion a year to service it. The sale fixed the airline's future. The cost of its past is still on the public ledger.

Questions to ask about any privatisation

• How much of the price goes to the government, and how much stays in the company?
• Which debts went with the sale, and which stayed behind with taxpayers?
• What did the buyer promise on jobs, investment and service, and who checks?
• Was the asset sold in an open, competitive auction?

The ledger

Munshi's noteA company is worth what someone will pay for it after the bad debts are taken out. Clean the ledger first, and the buyers come.

Sources

1. Dawn, 23 December 2025Arif Habib consortium emerges victorious in PIA auction with Rs135bn bid
2. Arab News, 23 December 2025Pakistani consortium acquires 75 percent stake in PIA in major privatization move
3. The News, December 2025PIA sold for Rs135bn in landmark IMF linked privatisation
4. Profit (Pakistan Today), 28 April 2026Consortium completes full takeover of PIA with Rs45bn guarantee, sets fleet expansion target
5. Aaj News, 29 June 2026PIA officially handed over to new management
6. Gulf NewsPIA's proud past: speed records, long haul firsts, 10 top records you must know

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