The federal government has decided to sell its entire 100 percent stake in Pakistan International Airlines (PIA), marking one of the most significant privatizations moves in the country’s recent history.
The decision is the clear manifestation of the government’s growing urgency to rescue the struggling national carrier and minimize the financial burden it places on the public purse.
Phased Sale with Full Control for Investors
Under the revised privatization plan, the government will initially auction 75 percent of PIA’s shares on December 23. While this first phase gives investors controlling ownership, the successful bidder will also be offered a “green shoe” option to acquire the remaining 25 percent stake.
This option can be exercised within one month of the auction at a 12 percent premium over the original bid price. Officials kept on explaining that the premium compensates for deferred payment, as the buyer will be allowed to pay for this final tranche after one year, rather than upfront.
This structure is intended to make the deal financially attractive while ensuring complete operational control for the new owner.
Revised Payment Terms to Support PIA’s Revival
In another investor-friendly move, the government has revised the payment structure. Only 7.5 percent of the bid amount will be paid in cash to the government, while the remaining 92.5 percent will be injected directly into PIA as equity. This marks a sharp departure from the earlier privatization attempt, which required bidders to deposit 15 percent in cash.
According to officials, the focus has shifted from short-term revenue generation to long-term revival and sustainability of the airline.
Why the Strategy Changed
Prime Minister Shehbaz Sharif had earlier proposed selling a 60 percent stake, but that plan failed to attract serious interest. Adviser to the Prime Minister on Privatization Muhammad Ali confirmed that the government expanded the offer after bidders made it clear they wanted complete or near-complete ownership to ensure swift decision-making without government interference.
“All bidders wanted at least 75 percent ownership, and some insisted on full control,” Ali said.
Cleaning Up PIA’s Balance Sheet
To sweeten the deal, the government last year transferred Rs654 billion of PIA’s debt to a holding company, a liability now borne by taxpayers. In the current fiscal year alone, Rs 34.7 billion has been allocated from the federal budget for
- Debt servicing
- Pensions
- Medical obligations
While PIA’s equity has turned positive—reaching Rs 30 billion—the new owners will still need to clear Rs 26 billion in outstanding taxes and airport-related dues, along with foreign liabilities such as aircraft leases.
Strong Interest from Major Business Groups
Several heavyweight investors are in the race, including the Lucky Cement Consortium, Arif Habib Consortium, Fauji Fertilizer (Fauji Foundation), and Air Blue. With improved finances, restored international routes, and tax concessions, the government is now hoping this time privatization will finally put PIA on a sustainable flight path.