Arif Habib consortium wins PIA privatisation bid with Rs135 billion offer

Islamabad (Web Desk): The consortium led by Arif Habib Corporation Limited has clinched a majority shareholding in Pakistan International Airlines (PIA) after submitting the highest offer of Rs135 billion in the privatisation of the national flag carrier.

As the bidding began, the highest offer of Rs115 billion came from a consortium led by Arif Habib Corporation Limited, followed by a Rs101.5 billion bid from a group headed by Lucky Cement Limited, while private airline Air Blue (Private) Ltd submitted a bid of Rs26.5 billion.

The contest intensified in the next phase when the Arif Habib–led group adjusted its bid from Rs135 billion to Rs121 billion, following a sharp increase by the competing consortium headed by Lucky Cement Limited, which raised its offer from Rs101.5 billion to Rs134 billion during the second round of open bidding.

Earlier, the process formally commenced with a Privatisation Commission official opening the bids in the first round, marking Pakistan’s second televised effort to privatise the state-owned airline. 

A Privatisation Commission official opened the bids during the broadcast.

Speaking ahead of the process, Privatisation Commission Chairman Muhammad Ali said selling PIA was part of the government’s reform drive, stressing that the aim was not simply to offload the airline but to make it financially independent. He added that privatisation would bring fresh investment and help restore the carrier’s former stature.

The first round of open bidding was held in Islamabad with three parties competing to acquire a controlling stake. Since two bids crossed the government’s reference price of Rs100 billion, officials said the final outcome will be decided through an open auction.

In the next phase, the bidder with the lower qualifying offer will be allowed to match or exceed the highest bid.

The Lucky Cement–led consortium includes Hub Power Holdings Limited, Kohat Cement Company Limited and Metro Ventures, while the Arif Habib Corporation group comprises Fatima Fertiliser Company Limited, City Schools and Lake City Holdings Limited. Air Blue participated as the third bidder.

The auction marks Pakistan’s second televised attempt to sell the once-renowned flag carrier after last year’s process collapsed when it attracted only a single bid far below the benchmark price.

The ceremony began at 4:30pm, with representatives of each group stepping forward one by one to place sealed envelopes into a transparent box during the live broadcast.

Officials said bidding for the majority stake is being conducted in two phases, with a second open-bidding ceremony scheduled later the same day.

Under the transaction structure, 92.5% of the amount paid for the 75%  stake will be injected into PIA, while 7.5% will go to the government.

The state will retain a 25% stake, which bidders may choose to acquire later or leave with the government.
Officials said the framework allows investors seeking either 75% or full ownership. Entities that do not participate in the bidding cannot later join the winning consortium, a condition that no longer applies to Fauji Fertiliser following its withdrawal.

Under the payment terms, the successful bidder must pay two-thirds of the bid within 90 days, with the remaining one-third payable within 12 months. The government has guaranteed 12 months of job security for PIA employees, while pension liabilities, medical benefits and other post-retirement obligations will be handled by the holding company. Current salaries and benefits will be paid by the new owners.

PIA currently holds rights to 78 destinations and controls around 170 landing slots worldwide, but officials said the airline urgently needs capital and professional management to revive operations.

Last year, the government set a minimum price of $305 million for a 60% stake but received only one offer of $36 million from Blue World City, which declined to raise its bid, citing financial weaknesses and operational leakages. Since then, PIA’s position has improved, with the government assuming most legacy debt, the airline posting its first pre-tax profit in two decades, and the UK and EU lifting a five-year ban that had blocked access to key routes.

Officials and analysts say the reopening of these markets could significantly boost revenue and support a stronger valuation than in last year’s failed auction.

The sale of PIA is part of a wider privatisation programme tied to Pakistan’s IMF bailout, which also includes plans to offload stakes in state-owned banks, power distribution firms and other loss-making enterprises to ease fiscal pressure and rebuild investor confidence.