PIA bidding: Arif Habib emerges as highest bidder, outbids Lucky Group

Islamabad: The Arif Habib Group-led consortium has emerged as the highest bidder in the privatisation of Pakistan International Airlines (PIA), placing a record-breaking bid of Rs135 billion in the final round of open bidding.

The second-highest bid came from the Lucky Group consortium, which offered Rs134 billion, setting the stage for one of the most competitive privatisation exercises in Pakistan’s aviation history.

The final round of open bidding saw Arif Habib outpace Lucky Group, securing the country’s first major airline privatisation in nearly two decades.

The privatisation process attracted multiple bidders, including a consortium of four companies—Arif Habib, Fatima Fertilizer, City School, and Lake City Holdings—as well as Pakistan’s private airline Airblue and the Lucky Group consortium.

In the two previous rounds, the Arif Habib consortium had consistently led the bidding, with Rs121 billion and Rs116 billion bids in the first and second rounds, respectively, demonstrating strong investor interest in Pakistan’s national carrier.

The government of Pakistan had set a minimum reserve price of Rs100 billion for the sale, aiming to open new avenues for private investment while reducing the financial burden of PIA, which has long been operating under government ownership.

According to the privatisation framework, the successful bidder will acquire a controlling 75 per cent stake in PIA, with the option to purchase the remaining 25 per cent from the government within a stipulated timeframe. The deal is expected to bring much-needed reforms to the airline and improve its operational and financial efficiency.

The historic sale marks the government’s second attempt at privatising PIA after last year’s effort failed due to insufficient bids. Analysts say the successful bid by the Arif Habib consortium could pave the way for a turnaround in the airline’s fortunes and help eliminate years of losses borne by the national exchequer.

Chairman of the Privatisation Commission, Muhammad Ali, said the process is part of the government’s policy to open new investment avenues. “Two consortiums have expressed interest in acquiring 100 per cent and 75 per cent of the shares,” he added.

This marks the second attempt by the current government to privatise PIA. Last year, the process failed when only one bid of Rs10 billion was submitted against a reserve price of Rs85 billion.

Currently, the government holds approximately 96 per cent of PIA, which has historically been a loss-making entity under state ownership. Analysts note that the sale is expected to relieve the national exchequer from annual losses incurred in running the airline.

Under the privatisation framework, 75 per cent of PIA’s shares will be sold initially, with the successful bidder given the option to acquire the remaining 25 per cent within 90 days. Two-thirds of the proceeds from the 75 per cent stake must be paid within 90 days, with the balance payable over a year. Of the total proceeds, the government will directly receive only 7.5 per cent, while the remainder will be reinvested in PIA to improve its fleet and operational performance.

Experts say the privatisation could prevent billions of rupees in annual losses that the government had been covering for PIA. The airline’s market value has improved, with equity moving from a negative Rs45 billion last year to Rs30 billion following the transfer of liabilities. The successful bidder will also benefit from exemptions on an 18 per cent general sales tax on aircraft leases, and certain tax liabilities will be transferred to the holding company.