PIA privatization sets stage for structural reform and investor confidence

In a significant development for Pakistan’s national carrier, the government has taken a historic step in the privatization of Pakistan International Airlines (PIA), positioning the airline for structural reform, fresh investment and operational turnaround after years of losses.

The move marks one of the most transparent and actionable privatization processes in the country in two decades.

In the latest episode of On My Radar, Kamran Khan highlighted the government’s roadmap for the airline’s new owners, emphasizing that the privatization plan not only transfers ownership but also ensures 92.5% of the proceeds will be reinvested back into PIA. This approach aims to stabilize the airline financially while enabling the new stakeholders to implement operational reforms.

The Arif Habib-led consortium, which includes Fatima Fertilizer, AKD Group, City School, and Lake City Holdings, has so far acquired a 75% stake in PIA. The group has indicated plans to purchase the remaining 25%, potentially achieving full private ownership of the airline.

Under the privatization framework, the consortium may also bring in additional investors, including Fauji Fertilizer or even a foreign airline, before finalizing the complete acquisition.

Following the acquisition, the consortium faces the critical task of translating PIA’s promise of “Excellence in Service” into a tangible reality. Aviation experts stress that turning PIA into a first-class national carrier requires prioritizing safety, discipline, and professional management in flight operations. Eliminating political interference and establishing an autonomous, professional board and management structure are seen as essential steps toward meeting international standards.

Historically, PIA’s challenges have included excessive costs and overstaffing. Experts note that the solution lies not in mass layoffs but in gradual reforms, performance-based salaries, and golden handshake programs.

Additionally, fleet optimization - focusing on aircraft with lower training and maintenance costs - will be vital for financial sustainability.

Strategic route selection is another key factor. The airline must focus on profitable markets rather than emotional or politically motivated routes, with special attention to religious travel such as Hajj and Umrah, as well as major international markets including the Middle East, Europe, the UK, the US, and Canada.

Modern facilities, punctuality, luggage security, attentive staff, and world-class digital and in-flight entertainment systems are also essential to restore PIA’s reputation among passengers.

By acquiring a 75% stake in PIA for PKR135 billion ($482 million), the Arif Habib consortium has sent a strong signal to both domestic and international investors that Pakistan is cultivating a stable business environment capable of supporting large-scale investments. Analysts believe this move will further boost investor confidence in the country.

The government, while selling only a 7.5% stake, has effectively freed PIA from PKR654 billion in debt, liabilities, and cumulative operational losses.

This “clean-up” has set the stage for restructuring, rehabilitation, and new investment, offering a model that could serve as a blueprint for the privatization of other state-owned enterprises operating at a loss in Pakistan.