Here we go again: Pakistan absorbs PIA’s debt and seeks bids for privatization
A key requirement of the IMF financial assistance package, the Pakistani state must divest from loss-making companies and is willing to sell the national airline.
The Pakistani government is preparing to launch a renewed effort to privatize its national airline, Pakistan International Airlines (PIA), announcing that it will seek "expressions of interest" (EOIs) for the sale of a majority stake. The move follows a failed previous attempt and comes after a strategic decision to clean up the airline’s balance sheet by absorbing much of its substantial legacy debt.
According to the Ministry of Privatization, the Privatization Commission has formally approved the prequalification criteria for potential bidders, aiming to sell between 51% and 100% of PIA's equity, including management control.
The privatization of PIA is a key part of broader economic reforms demanded by the International Monetary Fund (IMF) under a $7 billion assistance program. Pakistan is working to reform or offload state-owned enterprises that, like PIA for decades, have been persistent drains on public resources. The airline, described as “heavily indebted,” has required repeated government bailouts over the years.
The announcement comes alongside recent reports (early April 2025) that PIA posted its first annual profit in more than two decades—a positive milestone, though one that must be viewed within the broader context of deep structural and financial changes underway.
Learning from past failures
A previous privatization attempt in October 2024 failed dramatically. Only one consortium, Blue World City (BWC), submitted a bid—offering just $36 million for a 60% stake, far below the government’s expected minimum valuation of around $306 million.
One of the key obstacles cited by interested parties at the time was PIA’s overwhelming legacy debt, which exceeded $2.9 billion. To make the offer more appealing this time, the Pakistani government has transferred “nearly all” of this debt to the state’s accounts, effectively separating it from the operating entity being offered for sale.
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Once a benchmark for Asian aviation, Pakistan International Airlines has endured decades of turmoil, including allegations of mismanagement, overstaffing, an aging fleet, and intense regional competition. Operational and safety issues even led to flight bans in key regions such as Europe and the U.S.—though the EU ban was lifted in late 2024, allowing PIA to resume some European routes in January 2025.
Still, economic pressures and commitments to the IMF have created renewed urgency for the sale. With its debt burden now offloaded, this fresh bidding process marks a pivotal moment for the future of Pakistan International Airlines. Some reports suggest the full privatization timeline could extend through December 2025.
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