Pakistan has successfully privatized its national flag carrier, Pakistan International Airlines (PIA), by selling a 75% stake to a consortium led by the Arif Habib Group for 135 billion Pakistani rupees, approximately $482 million. This landmark deal, finalized on Tuesday, December 23, 2025, marks a major step in the government's long-delayed privatization program aimed at reducing losses in state-owned enterprises and easing pressure on public finances. The government will retain the remaining 25% stake in the airline.
The Arif Habib Group, a prominent Pakistani conglomerate with interests in financial services, cement, steel, energy, and fertilizers, emerged as the winning bidder after a competitive auction process. Three pre-qualified bidders, including the Lucky Group and private airline Airblue, participated in the auction. The initial bids saw Arif Habib Group offering Rs 115 billion, Lucky Cement at Rs 105.5 billion, and Airblue at Rs 26.5 billion. Airblue was later disqualified for bidding nearly three-fourths less than the minimum price of Rs 100 billion, leading to a final round between Arif Habib and Lucky Cement. The Arif Habib consortium's final bid of Rs 135 billion went unchallenged.
PIA, once considered among Asia's leading airlines, has struggled for decades with mismanagement, political interference, overstaffing, and mounting debt. The airline has relied heavily on government support to stay afloat. A 2020 pilot licensing scandal led to flight bans to the European Union, the United Kingdom, and the United States, further impacting revenues; however, these bans were recently lifted, boosting the privatization drive.
The privatization of PIA is a central component of Pakistan's economic reform agenda under a $7 billion bailout agreement with the International Monetary Fund. This deal marks Pakistan's first major privatization transaction in nearly two decades. The government had previously taken over PIA's liabilities, which stood at Rs 654 billion, to make the airline more attractive to investors.
Under the terms of the agreement, 92.5% of the Rs 135 billion from the sale will be reinvested into the airline to support operational recovery and growth, while the remaining 7.5% will go to the government. The new investor is also required to invest an additional Rs 80 billion over the next five years to stabilize and modernize PIA's operations. The government expects the new owner to run the airline by April, subject to approvals.
Adviser to the Prime Minister on Privatisation, Muhammad Ali, stated that the deal was structured to inject fresh capital into the airline rather than simply transfer ownership. He also mentioned that the government would receive approximately Rs 10 billion in cash upfront and retain a 25% stake valued at around Rs 45 billion. The Arif Habib Group plans to expand the airline's fleet in phases, initially to 38 aircraft and later to 65, depending on demand.
Prime Minister Shehbaz Sharif praised the transparency of the bidding process, calling it the largest transaction in Pakistan's history. Finance Minister Muhammad Aurangzeb also lauded the transparency of the bidding process. Interior Minister Mohsin Naqvi and Defence Minister Khawaja Asif hailed the sale as a vote of confidence in the national economy.
The privatization is expected to improve management practices, restore the airline's financial stability, reduce long-term losses, improve service quality, expand international routes, and attract sustainable private investment.
