Pakistan International Airlines (PIA) is expected to be run by a new owner from April next year and receive fresh capital under a deal to privatise the flag carrier, a senior official said on Wednesday.

A consortium headed by the Arif Habib Corporation emerged as the top bidder in a live-televised auction for a 75% stake in PIA on Tuesday, marking a breakthrough for the government’s long-delayed privatisation of the carrier.

The Arif Habib consortium offered Rs135 billion ($482.14 million), surpassing a government reserve price of Rs100 billion, in a sharp turnaround from last year’s failed sale attempt.

Prime Minister’s Adviser on Privatisation, Muhammad Ali, told Reuters in an online interview that the state expects a new owner to be running the airline by April, subject to approvals.

The process now moves to final approvals by the Privatisation Commission board and the cabinet, expected within days, with contract signing likely within two weeks and financial close after a 90-day period to meet regulatory and legal conditions.

Ali said the government would receive about Rs10 billion in cash upfront and retain a 25% stake valued at around Rs45 billion.

The deal was structured to inject fresh capital into the airline rather than simply transfer ownership, he said.

“We did not want a situation where the government sells the airline, takes its money, and the company still collapses,” Ali said.

The winning consortium also comprises fertiliser maker Fatima, private school network City Schools and real estate firm Lake City Holdings Limited.

Ali said Fauji Fertilizer Company did not bid but could still join the winning consortium as a partner, noting the buyer can add up to two partners – including a consortium partner or a foreign airline – if they meet the qualifying criteria.

Allowing partners adds financial strength and could bring global aviation expertise, he said.

IMF pressure

Ali said safeguards, including retained earnest money and an additional payment on signing, would allow the government to move to the second-highest bidder if the deal fails to close.

On labour, Ali said the buyer must retain all employees for 12 months after the transaction, with contracts unchanged, adding that the PIA workforce has already shrunk in recent years.

Ali said the privatisation was a key test of Pakistan’s reform credibility with the IMF, adding that failure to offload loss-making state firms risked renewed pressure on public finances.

He said closing the deal would signal momentum on reforms and privatisations, adding that the government was working through a pipeline of future transactions once PIA closes.

Later, addressing a press conference alongside Information Minister Ataullah Tarar, Ali said the objective of privatisation was based on the principle that running commercial enterprises is not the government’s role, and that the private sector is better positioned to manage such entities efficiently.

He said private investment would lead to the induction of new aircraft and improvement in PIA’s services.

According to him, the government’s 25 per cent stake in the airline is valued at Rs45 billion.

He explained that if these remaining shares are sold in the future, the government would receive Rs45 billion, bringing the total economic value of the privatisation deal to Rs55 billion.

The adviser said that 7.5 per cent of the bid amount — equivalent to Rs10.125 billion — would be paid directly to the government, while the remaining 92.5 per cent, amounting to Rs124.875 billion, would be invested back into PIA.

He said the investment would be made in two phases, with two-thirds injected upfront and the remaining one-third within 12 months after the completion of financial close.

The adviser clarified that PIA’s properties were not included in the privatisation deal.

Referring to the airline’s operational status, Muhammad Ali said that PIA currently operates flights to 30 destinations, holds designation rights for 78 countries and has air services agreements with 97 countries, describing PIA’s landing rights as its most valuable asset.

He said PIA currently has a fleet of 33 aircraft, including 16 Airbus A320s, 12 Boeing 777s and five ATRs, though only 19 of these aircraft are operational.

He added that PIA holds around a 30 per cent share of the domestic aviation market.

The adviser criticised what he described as deliberate misinformation surrounding the privatisation, saying some elements were falsely claiming that PIA had been sold for Rs10 billion, whereas the government would gain an overall value of Rs55 billion from the deal.

He said the government had offered incentives to buyers as part of the privatisation, including exemption from GST and assurances that no new taxes, levies or surcharges would be imposed.

According to Muhammad Ali, buyers have also been given five years to clear Rs26 billion in dues owed to the Federal Board of Revenue and other outstanding liabilities.