Pakistan Economic Crisis: Alas.. Finally Pakistan had to sell the national airline! Will Pakistan’s economy recover from the bid amount?

• Privatization of the national airline of Pakistan
• About 75 percent shares of PIA were purchased
• Highest bid by Arif Habib Consortium

Pakistan Economic Crisis: The whole world knows that Pakistan is facing financial problems. To revive Pakistan’s economy, the government of Pakistan has decided to privatize the national airline. Recently Pakistan National Airlines (PIA) has found a new owner. Arif Habib Consortium has placed the highest bid of around 135 billion Pakistani rupees, which is around Rs 4,317 crore. This company has bought 75 percent shares of PIA. Companies like Lucky Cement and Airblue also participated in the auction, but their bids were lower than Arif Habib Group.

Lucky Cement had bid 101.5 billion Pakistani rupees, or about Rs 3,246 crore, for the PIA, while Airblue’s bid was 26.5 billion Pakistani rupees, or about Rs 847 crore. 92.5 per cent of the total proceeds from this auction will be spent on improving, restructuring and strengthening the functioning of PIA.

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Arif Habib Consortium Company in Pakistan is a group of four companies operating in the fields of fertilizer, investment, energy and education. The group is considered as one of the most experienced and trusted corporate houses in Pakistan. The Government of Pakistan hopes that the arrival of this consortium will improve the financial position and services of PIA.

PIA currently has a fleet of 32 aircraft including Airbus A320, Airbus A330, Boeing 737 and Boeing 777. Despite this, the airline has been running at a loss for a long time. Poor management, lack of flights, frequent passenger complaints and mounting debt weakened PIA.

The biggest blow to PIA’s credibility was the plane crash in Karachi in 2020. After the accident, more than 260 PIA pilots’ licenses were found to be dubious or fraudulent. This resulted in several countries banning PIA’s flights, almost reducing the airline’s international revenue.

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As PIA’s losses mounted, it became increasingly difficult for the Government of Pakistan to manage PIA. Meanwhile, pressure mounted on the government to seek aid from the International Monetary Fund (IMF). The IMF clearly stated that loss-making state-owned companies should be privatized. Pakistan needs a package of approximately 7 billion from the IMF and the privatization of PIA is considered as a part of that requirement.

According to Muhammad Ali, Advisor to PIA’s Privatization Committee, the government’s aim is not just to sell the airline but to make it self-sustaining and strong. He explained that two-thirds of the payment can be taken initially and one-third later. Moreover, two new partners are allowed to be added after the winning bid.

Army-affiliated Fauji Fertilizer Company was initially included in the bidding process, but withdrew at the last minute. According to media reports, the military or government agency that won the contract would have sent the wrong message to the International Monetary Fund (IMF). The IMF wants PIA to be fully privately owned, so that the airline is free from government or military control.