Pakistan approves new plan to privatize national airline

Pakistan' Cabinet Committee on Privatization (CCoP) on Tuesday approved a fast-tracked plan to sell a 51-100% stake in Pakistan International Airlines Corp. (PIACL), including management control, in its second attempt to offload the struggling carrier.

Deputy Prime Minister Ishaq Dar while chairing the meeting of the Cabinet Committee underscored the government’s commitment to pushing ahead with the divestment, aiming to unlock the national carrier’s full potential and ease its strain on public finances.

The decision comes as Pakistan accelerates broader economic reforms under an IMF-backed agenda.

It is to be noted that PIACL has long been a financial drag on the treasury, with mounting liabilities and operational inefficiencies. The plan is expected to attract both local and foreign investors, with officials signaling a preference for strategic buyers capable of revamping the airline’s operations.

Notably, in the previous failed attempt, most of the six shortlisted parties were unwilling to partner with the government, as they had concerns over the complete ownership, sale tax of the acquiring aircrafts and negative equity of PKR 45 billion on the airliners balance sheet. Earlier, in the first attempt, the government had offered up to 60% stakes.

Now, under the second attempt, the government has allowed to off-load up to 100% shares, while also taken approval from the IMF for the removal of GST and absorbing PKR 45 billion negative equities to present the airliners with clean balance sheet. Notably, European routes which were closed for years, have now been opened—an incentive.

The first attempt to privatize PIA collapsed, where a real estate developer as the sole bidder, offered just PKR 10 billion against the PKR 85 billion asking price. Despite the failure, the government paid Ernst & Young PKR 1.2 billion in advisory fees, drawing criticism from former Privatization Minister Abdul Aleem Khan.