The privatization of Pakistan International Airlines (PIA) has encountered delays due to outstanding legal and regulatory requirements, officials informed lawmakers on Wednesday. The transaction cannot be finalized until a series of conditions agreed between the government and the buyer are fulfilled.
Background of the Deal
The delay affects the first closing of the deal, under which a consortium led by the Arif Habib Group agreed to acquire a 75 percent stake in the former national carrier for Rs135 billion ($482 million). This is one of Pakistan's most closely watched privatization transactions. The airline was privatized in December 2025 after a competitive bidding process that valued PIA at Rs180 billion ($643 million). The sale marked a significant step in Pakistan's efforts to offload loss-making state-owned enterprises, with PIA having accumulated over $2.8 billion in losses over the years.
Outstanding Conditions Precedent
Officials from the Privatization Commission and the Ministry of Defense stated that a number of Conditions Precedent (CPs) remain outstanding. These are legal, regulatory, and administrative requirements that both the government and the buyer must complete before ownership and management can formally change hands.
Defense Secretary Lt. Gen. (r) Muhammad Ali told a Senate committee: “The process is still pending till today as one of the CPs was to repeal PIAC Conversion Act 2016, a law that establishes government control over PIA. The buyers want this act to be repealed as per agreement so that PIA’s assets and controls could be transferred to its new management.”
Timeline Missed
The defense secretary said the Share Purchase and Subscription Agreement (SPSA) was signed on January 29, setting April 29 as the initial target for the first closing. However, several requirements remained outstanding on both sides, prompting the parties to move the target to May 25. That deadline also passed without parliament approving the required legislation. A temporary ordinance was issued to address one outstanding requirement, but it needs parliamentary approval to become permanent law.
Employee and Brand Concerns
The Senate committee discussed proposed legislative changes, with some members seeking clarity on the future status of PIA employees after the transaction. Lawmakers were informed that the PIA brand name would remain unchanged under the new ownership, though future corporate decisions would be governed by regulations of the Securities and Exchange Commission of Pakistan. The committee deferred consideration of the draft legislation and asked the government to make required changes before bringing it back on Monday.
Financial Details
A senior Privatization Commission official said the consortium has paid Rs5 billion ($18 million) so far, while approximately Rs85 billion ($305 million) remains payable at the first closing. “The government has not given administrative control to the consortium so it is hoped that the payment of Rs85 billion will be made once the government side completes the handover,” the official said, requesting anonymity. Arif Habib, chief executive of the group, did not respond to requests for comment. The consortium has indicated its intention to acquire the remaining 25 percent stake, potentially paving the way for full private ownership.
Official Optimism
Privatization Commission spokesman Imran Ghaznavi said the remaining requirements were nearing completion and expressed confidence that the transaction would move forward this month. “Arif Habib Consortium will be depositing the balance amount of approximately Rs85 billion required under the agreement at first closing. May 25, 2026 was a tentative date by which time it was agreed that the required Conditions Precedents, including international and domestic regulatory formalities, lessors consent and approvals would be completed.”
Ghaznavi noted that more than 40 conditions and pre-completion obligations had been identified under the agreement, with most already fulfilled. The remaining approvals and documentation are expected to be completed in the coming days. “The Consortium has confirmed the availability and readiness of their funds. After completion of CPs expected in the next few days, the first completion is expected to happen within June.” He added that the first closing would trigger the transfer of shares and payment of the remaining amount, bringing the privatization of Pakistan's national carrier a step closer to completion.
