The government has imposed several conditions on the potential buyer of Pakistan International Airlines (PIA), ensuring that the investor cannot resell the airline for at least three years following its acquisition. Additionally, the buyer must add 20 new aircraft to PIA’s fleet.
Arif Habib, Chairman of Arif Habib Corporation and one of the pre-qualified bidders for the airline, discussed these conditions in an interview with The Express Tribune. According to him, the government’s business plan for PIA’s privatization explicitly states that the buyer will be prohibited from reselling the airline for a minimum of three years.
Moreover, Habib revealed that the new owner would be required to expand PIA’s fleet by introducing at least 20 additional aircraft. Currently, PIA operates a fleet of 34 aircraft, of which 20 are owned by the airline, while the remaining are leased. The airline employs over 10,000 workers, with an average of 304 employees per aircraft.
Habib also suggested that the potential buyer is likely to purchase a 75% stake in PIA to gain majority control over the airline. The privatization process is expected to be completed by October 1, 2024.
One of the biggest challenges for PIA has been its financial liabilities, especially its debt. The airline currently holds a total debt of Rs800 billion, of which Rs600 billion has been transferred to a newly created holding company to facilitate the sale. The new buyer, however, will be responsible for repaying the remaining Rs200 billion.
Habib pointed out that most of PIA’s debt is owed to the Federal Board of Revenue (FBR) and the Civil Aviation Authority (CAA). He emphasized that the buyer should be granted a reasonable period for repayment, warning that any immediate demand for debt repayment could impact the final sale price of the airline.
Additionally, Habib highlighted that uncertainty surrounding PIA’s debt situation might deter potential buyers. When PIA was under government control, institutions provided some flexibility, but such assurances may not be available under private ownership.
Despite its financial struggles, Habib believes that PIA remains operationally viable. He stated that if the debt and workforce issues are properly addressed post-acquisition, the airline has the potential to quickly return to profitability.
As a solution, Habib proposed that the government reinvest the privatization proceeds into PIA itself, rather than diverting the funds elsewhere. He argued that this would help stabilize the airline and make it profitable in the future.
In terms of financial performance, the Ministry of Aviation recently reported to the National Assembly Standing Committee on Aviation that PIA had generated an operational profit of Rs3.187 billion between January and December 2023. However, the airline still suffered a net loss of Rs103.90 billion for the same period. To smooth the privatization process, Rs628.5 billion of PIA’s liabilities have been transferred to a holding company.
The committee also reviewed the functioning of the Aviation Division and its related departments, highlighting the significant challenges PIA faces as it moves toward privatization.
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