Why is the sale of Pakistan’s national airline stirring a political storm?

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Islamabad, Pakistan – After 7 decades arsenic Pakistan’s authorities airline, the authorities sold a bulk involvement successful Pakistan International Airlines (PIA) earlier this week for $482m successful a publically televised auction, ending years of failed privatisation attempts.

Arif Habib Limited (AHL), a Karachi-based securities brokerage, led the winning consortium, which includes AKD Group Holdings Limited, fertiliser shaper Fatima Fertilizer, backstage schoolhouse web City Schools, and existent property steadfast Lake City Holdings Limited.

What bash we cognize astir the winning bid?

On Tuesday, bidding took spot successful a packed five-star edifice successful Islamabad and lasted astir 90 minutes, with respective breaks. Three parties submitted archetypal bids for a 75 percent involvement successful the nationalist carrier.

To pull investors, the authorities restructured PIA past twelvemonth by hiving disconnected semipermanent liabilities worthy much than $2.3bn into a abstracted entity. It besides offered argumentation continuity guarantees and taxation relief, measures approved by the IMF.

In the archetypal round, Air Blue was disqualified from unfastened bidding aft offering $94.59m, good beneath the government’s minimum terms of $356.9m.

Once the 2 remaining consortia cleared the level price, unfastened bidding began. The AHL-led radical emerged victorious with a last connection of $482m for the 75 percent stake.

At a quality league a time later, Muhammad Ali, the government’s advisor connected privatisation, said 92.5 percent of the winning bid, amounting to astir $446m, would beryllium reinvested into PIA itself. The remaining $36m would spell to the government, which volition besides clasp a 25 percent stock valued astatine astir $160.6m.

Arif Habib aboriginal told a backstage tv transmission that the consortium intends to bargain the remaining 25 percent involvement arsenic well, with the purpose of relaunching the hose by April adjacent year.

Under the presumption of the deal, the consortium indispensable wage two-thirds of the acquisition terms wrong 3 months, with the remaining one-third owed wrong a year. A determination connected acquiring the remaining 25 percent involvement indispensable besides beryllium made wrong 3 months.

Why did the request to privatise PIA arise?

Once regarded arsenic Pakistan’s astir prestigious brand, PIA operated flights crossed the satellite and adjacent boasted uniforms designed by Pierre Cardin. Founded successful 1955 with a fleet of 13 aircraft, the hose rapidly expanded its footprint.

PIA operated its archetypal planetary formation to London via Cairo and Rome and went connected to execute respective milestones. It became the archetypal Asian hose to get a pitchy aircraft, the Boeing 707, opened caller planetary routes, and is credited with helping motorboat Emirates, the Dubai-based carrier, successful the 1980s.

More than 2 decades later, however, the hose is wide viewed arsenic a debt-ridden load connected the state. Successive governments attempted to offload PIA but failed amid absorption from absorption parties and protests by worker unions.

According to Ali, PIA accumulated much than $1.7bn successful liabilities betwixt 2015 and 2024, portion semipermanent liabilities exceeded $2.3bn.

“This time, the process was carried guardant with lessons from the past and completed with extended mentation and accountability,” helium said astatine Wednesday’s quality conference.

Ali said PIA erstwhile operated astir 50 craft and served astir 40 planetary destinations. Today, lone 18 craft are operational retired of a fleet of 33.

He added that the hose presently serves astir 30 destinations, operates astir 240 play round-trip flights, and holds much than 30 percent of the home market. That stock has fallen sharply from astatine slightest 60 percent successful earlier decades with the emergence of backstage carriers.

Adviser to the Prime Minister connected Privatisation Muhammad Ali speaks astatine his bureau successful Islamabad, Pakistan December 24, 2025. REUTERS/Salahuddin

PIA besides holds landing rights for astatine slightest 78 destinations and has entree to much than 170 airdrome slots.

In 2014, the hose employed much than 19,000 people, including astatine slightest 16,000 imperishable staff. Over the years, that fig gradually reduced to less than 7,000 employees.

PIA was besides barred from flying to the United Kingdom and Europe successful June 2020, a period aft 1 of its craft plunged into a Karachi street, sidesplitting 97 people. The catastrophe was attributed to quality mistake by the pilots and aerial postulation control, and was followed by allegations that astir a 3rd of the licences for its pilots were fake oregon dubious.

However, the four-year prohibition from Europe was lifted successful December 2024 by the European Union Aviation Safety Agency, and the Pakistani state-owned bearer resumed flights to the continent successful January. Then, successful July, the UK, too, lifted its ban.

What is the disapproval against the auction and however bash analysts presumption the sale?

While the authorities hailed the transaction arsenic the “best imaginable outcome” with “great symbolic value”, absorption parties condemned the deal.

The Tehreek Tahafuz Ayeen-i-Pakistan (TTAP), an absorption confederation led by the Pakistan Tehreek-e-Insaf (PTI) of erstwhile Prime Minister Imran Khan, rejected the privatisation, informing that disposing of a nationalist plus without nationalist mandate, parliamentary oversight, transparency and law legitimacy would beryllium unacceptable.

Other commentators questioned the bidding process, describing it arsenic an enactment of “obfuscation” that raised much questions than answers. Some accused the authorities of efficaciously selling the 75 percent involvement for conscionable $36m — since the remainder is to beryllium invested backmost into an hose that its new, backstage owners volition present payment from.

Ali dismissed those claims.

“Our structuring was specified that we get 10 cardinal rupees ($36m) successful cash, and the worth of our equities is 45 cardinal rupees ($160m). So, the authorities volition get a worth of 55 cardinal rupees ($196m) successful total, and 125 cardinal rupees ($446m) volition travel backmost into the airline,” helium said.

Several economists and aviation analysts reason that the result was the champion woody possible, careless of which authorities was successful power.

Fahd Ali, an economist and adjunct prof astatine the Lahore University of Management Sciences (LUMS), described the statement arsenic watertight.

“Critics person besides been talking astir the lucrative landing rights and routes that it holds and however the caller proprietor whitethorn merchantability these to retrieve its costs. But radical neglect to recognize that PIA’s destinations are the geese that laic the aureate eggs,” helium told Al Jazeera.

The hose was incapable to capitalise connected those routes due to the fact that it required further concern that the authorities could not provide, helium said, adding that selling them would wounded aboriginal earnings.

“Given these constraints, the woody seems each right,” helium said.

Karachi-based economical commentator Khurram Husain said the transaction was unconventional, driven little by nett than by the request to stem losses.

“You tin chopped your losses 2 ways. Either you unopen it each down, denotify and delist the company, with PIA ceasing to exist. Or the different was to manus it implicit to backstage sector, and person them tally it,” helium told Al Jazeera.

Husain, a erstwhile chap astatine the Woodrow Wilson Center, said PIA’s semipermanent liabilities of $2.3bn would person continued to turn had the authorities not acted.

“At what constituent does 1 stop? That was the government’s calculus. They were not looking to bring down losses, but to power it,” helium said.

Who is portion of the consortium and wherefore is the military’s inclusion raising questions?

The consortium is led by Arif Habib, whose concern interests span brokerage services, fertilisers, alloy and existent estate. He has antecedently served arsenic a subordinate of the Privatisation Commission.

Other partners see Fatima Fertilizer, portion of the Fatima Group and Arif Habib Group, City Schools, founded successful the precocious 1970s and present operating much than 500 campuses with astatine slightest 150,000 students, and Lake City Pakistan, a Lahore-based existent property developer. AKD Holdings, led by businessman Aqeel Karim Dhedhi, is besides portion of the group.

But the post-sale determination by the Fauji Fertilizer Company Limited (FFC) to articulation the consortium has triggered debate. FFC, which is listed connected the Pakistan Stock Exchange, is simply a subsidiary of the military-run Fauji Foundation, which owns much than 40 percent of its shares.

As Pakistan’s largest fertiliser shaper with interests successful energy, nutrient and finance, FFC’s determination is seen by immoderate arsenic an enlargement of the military’s footprint into the aviation sector.

Pakistan’s subject remains the country’s astir almighty institution, having straight ruled for much than 3 decades and retaining heavy power implicit political, social, and economical affairs.

Critics constituent to the Special Investment Facilitation Council (SIFC) arsenic an illustration of the military’s increasing role successful economical decision-making. Established successful June 2023 during Prime Minister Shehbaz Sharif’s archetypal term, the SIFC is simply a high-powered assemblage of civilian and subject leaders tasked with promoting concern by cutting done bureaucracy. It has faced sustained disapproval implicit transparency.

Husain said FFC’s beingness successful the consortium could beryllium “very significant” implicit the agelong term.

“It’s imaginable that nether this deal, what has truly happened is that PIA has moved from 1 limb of the authorities to another,” helium said.

Ali Khizar, a Karachi-based economical analyst, said FFC’s inclusion could supply semipermanent information assurances for backstage investors.

“Historically, we person seen successful Pakistan with policies taking 180-degree crook with changing government, truthful possibly they needed to guarantee to person subject beingness for providing capitalist security. But if FFC ends up with much shares than AHL, past that could alteration their power and decision-making,” helium told Al Jazeera.

Fahd Ali said military-run businesses thin to run otherwise from different state-owned enterprises (SoEs).

“They stay shielded from the governmental interference that besets different SoEs. However, those who deliberation that the authorities volition present beryllium capable to lavation its hands of PIA mightiness beryllium mistaken,” helium said.

Khizar added that portion the transaction marks a breakthrough aft 2 decades of failed attempts astatine privatising the carrier, concerns volition persist if 1 hose — present backed by important backstage superior and the military’s clout — ends up controlling the aviation market.

“There is simply a fearfulness for different home airlines,” helium acknowledged. “But past determination is simply a batch of potential. PIA’s main accidental is the planetary marketplace and that is wherever it indispensable compete,” helium said.

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