Will PIA be privatized, or will it remain under the state’s control? This is the question that has often sparked intense debate among both the media and the business community. But now, it appears that the government has, at long last, decided to dispense with an entity that once symbolized national pride and glory, but has since been reduced to a shadow of its former self – thanks to a long list of reasons: overstaffing, mismanagement, operational inefficiencies, and political interference. An article published in Business Recorder suggests that the privatization efforts have intensified, and chances of the deal are now very high.

The government’s decision to privatize the national flag carrier is not just about selling an airline; it’s a crucial test for Pakistan’s capital markets and its ability to attract serious investors. As reported by Dawn, the government has received expressions of interest from five parties, including business groups and Fauji Fertilizer Company Ltd, a military-owned firm.

Why PIA Needs Privatization

A Legacy of Losses

PIA has been losing money for years. According to the latest financials reports, the airline’s cumulative losses exceeded Rs. 600 billion, with a pre-tax loss of ~Rs 45 billion in 2024. The government has repeatedly injected funds to keep it afloat, but the bleeding hasn’t stopped. According to a report published in The Express Tribune, PIA incurred a net loss of Rs4.6 billion and one-off accounting profit of Rs26 billion due to treating past losses as future assets.

Operational Inefficiencies

One of PIA’s major problems is that it has been top-heavy, with around 7547 employees for just 19 aircraft — an extremely high ratio which is at odds with global standards. In addition, many of its aircraft are past their prime, leading to higher maintenance costs, frequent breakdowns, near-misses, and the constant threat of a crash. Appointments based on political favors rather than merit is another major hurdle that has worsened PIA’s management issues.

The headcount shows a steady decline from 16,271 in 2015 to 7,755 in 2023, then a temporary rise in 2024 (10,323 including outsourced staff) before downsizing in 2025.

Burden on Taxpayers

Every year, billions of rupees from the national budget go into PIA instead of being spent on education, healthcare, or infrastructure. Privatization could free up these funds and shift the responsibility to a private entity that can run the airline more efficiently.

Challenges in Selling a Loss-Making Airline

Privatizing PIA isn’t as simple as putting up a "For Sale" sign. Several hurdles — such as massive debt and liabilities, union resistance and job cuts, regulatory and legal issues, and more — stand in the way, making the privatization of the national flag carrier a formidable challenge.

What Privatization Means for Pakistan’s Capital Markets

This isn’t just about PIA — it’s about whether Pakistan can successfully privatize large state-owned enterprises (SOEs). If PIA’s privatization succeeds, it could pave the way for other struggling SOEs (like Steel Mills, DISCOs) to be sold. Failure, however, could scare off investors for years. Per Dawn, the current push marks the first significant sale of an SOE since a Supreme Court decision suspended the sale of the Pakistan Steel Mills (PSM) two decades ago.

A transparent, well-executed privatization could improve Pakistan’s image in global capital markets. And if PIA is sold efficiently, it would demonstrate Pakistan’s sincerity about economic reforms.

Potential Buyers and Deal Structure

By August 2025, the privatization of Pakistan International Airlines (PIA) has reached a decisive stage. According to Dawn, four pre-qualified buyers are now in the midst of the due diligence process, carefully examining the airline’s financial and operational records. This review marks the final step before they submit binding offers for a controlling share — ranging from 51% to a full 100% — in the national carrier. The final bidding round is expected to take place later this year, likely in the last quarter. The deal structure has already separated the airline's core assets from its massive liabilities, which have been transferred to a holding company to make the sale viable.

All four prospective buyers are domestic, reflecting a mix of Pakistan’s industrial, financial, and aviation powerhouses. The contenders include three business consortia led by Lucky Cement, Arif Habib Corporation, and Fauji Fertilizer Company. The fourth is Air Blue Limited, the only private airline in the race, and notably the only bidder with direct experience in Pakistan’s aviation industry.

Will This Privatization Succeed?

The privatization of PIA may be a success story if the process ensures transparency, which means there should be no political interference. There should also be a clear plan for handling the national carrier’s liabilities, while fair severance package to reduce union resistance should be worked out. And finally, incentivizing investors — specifically through tax breaks and regulatory easing to attract buyers — is an essential step in that direction.

What Failure Could Mean

If the privatization is botched — due to lack of buyers, or legal battles — it could deter future investment, force the government to keep funding PIA indefinitely, and erode Pakistan’s credibility in capital markets.

Conclusion

Aviation Institute of Management calls the privatization of PIA a defining moment, which goes without saying. The privatization of the national flag carrier is not just selling an airline — it’s a litmus test for Pakistan’s economic reforms. If executed correctly, it could restore confidence in the country’s capital markets and set a precedent for other SOEs. If mishandled, it could reinforce the perception that Pakistan is anything but investor-friendly.

The world is watching. Will Pakistan pass the test?