Thank you for this very timely, realistic, and useful analysis. I believe the core of the problem, the lack of intention to improve the business friendliness, is that the government is not willing to reduce its size. The 18th Amendment aimed to share resources and responsibilities with the provinces. Resources are flowing, yet the center refuses to adapt and lean up. And this creates that tendency to slow the progress on structural reforms.
1) "while about Rs125bn is injected into the airline as new equity to recapitalize the business" ..... Comment : not yet. In one year , he will invest ( probably by borrowing against PIA's assets).
2) "the government’s immediate “value” from the transaction is therefore about Rs55bn - roughly Rs10bn in cash and Rs45bn in equity''.....
Comment : Mr Arif Habib has the option to buy the remaining 25% in future, he is not bound to. So let us keep that Rs45 billion out of acknowledging for the moment. We will cross the bridge when we reach there.
3) "Without that ecosystem, privatization becomes a transaction, not a transformation" Comment : This is the best line of your article
Thank you for explaining the PIA privatization in a simple way. It really helps to see both the positive side and the challenges. Separating old debts makes sense, but the government still has a big financial burden to deal with. I also agree that changing ownership alone won’t fix everything. Real improvement will need wider reforms, better management, and a supportive environment so this becomes a long-term solution and not just a short-term deal.
Sir, given Pakistan’s highly charged socio-political environment, this was undoubtedly a difficult yet significant transaction. As you rightly observed, at least the financial bleeding of PIA is expected to stop. Going forward, however, this transaction will act as a litmus test for the government’s privatization policy—particularly its ability to generate investor interest and build confidence in the overall process.
In my view, the success of this initiative depends more on political stability than on economic fundamentals alone. Political opposition and criticism of this transaction have already intensified across social and electronic media, which may discourage prospective investors from participating in the privatization of other entities in the pipeline. On a broader level, such agitation could also slow down ongoing structural reforms under the IMF program. Resistance to these reforms is already evident through media narratives and strikes by pressure groups opposing the government’s efforts to rationalize subsidies enjoyed by certain sectors.
In this context, does this not put the “facilitating ecosystem” for privatization at risk? I would appreciate your views on how these challenges can be managed to protect and sustain an effective privatization ecosystem.
What will happen is that the airline will close in a couple of years. The land will developed and sold of as housing. Real estate bubble is real. Just think professor where is Pakistan going to find talent to run an efficient airline. Both the CEOs of indigo and Air India are foreigners. Which foreigner is an idiot to come and live in Pakistan.
Good one sir. But couple of points. 600 billion would have been roughly 300 billion if we did this 10 years ago and probably 1.2 trillion if we waited another decade. This accumulation of losses wasn’t going anywhere, many dictators, prime ministers and all political parties have tried and failed to run this.
PIA holding also retains some vwry valuable assets (hotels etc. ) if you want to wipe the 600 billion (~200 million usd) out with those assets, you can. It is now a simple question of are those assets capable of generating more than the debt servicing cost.
Finally. Banking and telecom privatization turned around those sectors and made thise genuinely contributory to growth. It also invited new investment in those sectors from parties who dont like competing with government.
Thanks Atif bhai for the analysis, I can’t stop thinking that privatisation (IMF trigger?) in Pakistan NEVER worked, please cite even one national great privatization project that has benefited people with positive net marginal benefits??? None. I do think through the privatization theater, a big white washing money laundering is playing out by elites with military blessing. I hope I am wrong, history is not in favor of a positive outcome unfortunately.
Brilliantly written I must say. Can you please guide about the status of PIAHCL-A? All the share holders equity - approximately 189 Million shares are with government or the new buyer? Many people are saying the shares PIAHCL-A will remain with the government and will not go to the new buyers? Please can you clarify this specific thing? Why is the share price dropping after privatization, shouldnt it boost the investors to buy more shares as all the big names have invested in it?
You mentioned the liabilities retained in PIA Holdings but you totally ignored the Assets retained in PIA Holdings like Hotel in New York etc. These assets also valued at Billions.
Yes, this is the right step—but it comes very late, and at a staggering cost.
Atif Mian is correct: PIA’s privatization may offer a cleaner structure for operational recovery, but it is not a fiscal victory. It is the burial of an institutional corpse that the state itself kept on life support for decades—with public money, political interference, and structural dysfunction. The government walks away with Rs55 billion in value and retains over Rs600 billion in liabilities. That is not reform. That is reparations for a crime no one is punished for.
What does this teach us?
First, Pakistan’s state-owned enterprises (SOEs) are not just commercial failures—they are reflections of a broken institutional nervous system. PIA died a slow death not because markets changed, but because competition was killed, meritocracy was denied, unions were politicized, and bureaucrats with no aviation experience were handed the cockpit. We did not just lose an airline; we destroyed a national symbol with our own hands.
Second, even this ‘sale’ does not solve the deeper malaise. Privatization is not transformation. Unless we radically reform the rules of the economic game—by strengthening competition, protecting investor rights, enforcing contracts, and depoliticizing economic institutions—we will only keep recycling ownership without generating productivity.
Third, this is a test case. If we finally had the spine to separate legacy liabilities and open the door to new investment, why can’t we do the same in the energy sector, where the scale of damage is far worse? Why should ordinary citizens continue to pay inflated bills to fund circular debt and inefficiency?
Finally, the Rs600 billion we are now paying as a nation is not a number. It is a price tag on our failure. It should haunt policymakers, wake up Parliament, and shake the complacency of those still defending other loss-making public assets. What is next? Railways? Steel Mills? WAPDA?
Privatizing PIA is not just a transaction—it is a mirror. And it reflects decades of institutional rot, elite capture, and avoidance of accountability. We should welcome this reform—but only if it becomes the first in a wave of deeper, braver structural changes. Otherwise, we are simply auctioning the debris of a failed state-business compact.
The state must now ask itself: What will we do differently going forward to stop creating the next PIA?
Best analysis I have read out there. Thank you Atif for still caring for Pakistan.
This was so easy to understand. Thank you for writing it down.
Thank you for this very timely, realistic, and useful analysis. I believe the core of the problem, the lack of intention to improve the business friendliness, is that the government is not willing to reduce its size. The 18th Amendment aimed to share resources and responsibilities with the provinces. Resources are flowing, yet the center refuses to adapt and lean up. And this creates that tendency to slow the progress on structural reforms.
Thank you Dr. Atif Mian, Best analysis I have read out there for PIA.
1) "while about Rs125bn is injected into the airline as new equity to recapitalize the business" ..... Comment : not yet. In one year , he will invest ( probably by borrowing against PIA's assets).
2) "the government’s immediate “value” from the transaction is therefore about Rs55bn - roughly Rs10bn in cash and Rs45bn in equity''.....
Comment : Mr Arif Habib has the option to buy the remaining 25% in future, he is not bound to. So let us keep that Rs45 billion out of acknowledging for the moment. We will cross the bridge when we reach there.
3) "Without that ecosystem, privatization becomes a transaction, not a transformation" Comment : This is the best line of your article
I think a good decision by the government.
Credible and sustainable structural reforms are essential to revive the market confidence.
Great analysis, very easy to understand.
Thank you for explaining the PIA privatization in a simple way. It really helps to see both the positive side and the challenges. Separating old debts makes sense, but the government still has a big financial burden to deal with. I also agree that changing ownership alone won’t fix everything. Real improvement will need wider reforms, better management, and a supportive environment so this becomes a long-term solution and not just a short-term deal.
Sir, given Pakistan’s highly charged socio-political environment, this was undoubtedly a difficult yet significant transaction. As you rightly observed, at least the financial bleeding of PIA is expected to stop. Going forward, however, this transaction will act as a litmus test for the government’s privatization policy—particularly its ability to generate investor interest and build confidence in the overall process.
In my view, the success of this initiative depends more on political stability than on economic fundamentals alone. Political opposition and criticism of this transaction have already intensified across social and electronic media, which may discourage prospective investors from participating in the privatization of other entities in the pipeline. On a broader level, such agitation could also slow down ongoing structural reforms under the IMF program. Resistance to these reforms is already evident through media narratives and strikes by pressure groups opposing the government’s efforts to rationalize subsidies enjoyed by certain sectors.
In this context, does this not put the “facilitating ecosystem” for privatization at risk? I would appreciate your views on how these challenges can be managed to protect and sustain an effective privatization ecosystem.
What will happen is that the airline will close in a couple of years. The land will developed and sold of as housing. Real estate bubble is real. Just think professor where is Pakistan going to find talent to run an efficient airline. Both the CEOs of indigo and Air India are foreigners. Which foreigner is an idiot to come and live in Pakistan.
Good one sir. But couple of points. 600 billion would have been roughly 300 billion if we did this 10 years ago and probably 1.2 trillion if we waited another decade. This accumulation of losses wasn’t going anywhere, many dictators, prime ministers and all political parties have tried and failed to run this.
PIA holding also retains some vwry valuable assets (hotels etc. ) if you want to wipe the 600 billion (~200 million usd) out with those assets, you can. It is now a simple question of are those assets capable of generating more than the debt servicing cost.
Finally. Banking and telecom privatization turned around those sectors and made thise genuinely contributory to growth. It also invited new investment in those sectors from parties who dont like competing with government.
Thanks Atif bhai for the analysis, I can’t stop thinking that privatisation (IMF trigger?) in Pakistan NEVER worked, please cite even one national great privatization project that has benefited people with positive net marginal benefits??? None. I do think through the privatization theater, a big white washing money laundering is playing out by elites with military blessing. I hope I am wrong, history is not in favor of a positive outcome unfortunately.
Brilliantly written I must say. Can you please guide about the status of PIAHCL-A? All the share holders equity - approximately 189 Million shares are with government or the new buyer? Many people are saying the shares PIAHCL-A will remain with the government and will not go to the new buyers? Please can you clarify this specific thing? Why is the share price dropping after privatization, shouldnt it boost the investors to buy more shares as all the big names have invested in it?
Thanks for bringing more clarity to the existing analysis available on other publications Atif!
You mentioned the liabilities retained in PIA Holdings but you totally ignored the Assets retained in PIA Holdings like Hotel in New York etc. These assets also valued at Billions.
Yes, this is the right step—but it comes very late, and at a staggering cost.
Atif Mian is correct: PIA’s privatization may offer a cleaner structure for operational recovery, but it is not a fiscal victory. It is the burial of an institutional corpse that the state itself kept on life support for decades—with public money, political interference, and structural dysfunction. The government walks away with Rs55 billion in value and retains over Rs600 billion in liabilities. That is not reform. That is reparations for a crime no one is punished for.
What does this teach us?
First, Pakistan’s state-owned enterprises (SOEs) are not just commercial failures—they are reflections of a broken institutional nervous system. PIA died a slow death not because markets changed, but because competition was killed, meritocracy was denied, unions were politicized, and bureaucrats with no aviation experience were handed the cockpit. We did not just lose an airline; we destroyed a national symbol with our own hands.
Second, even this ‘sale’ does not solve the deeper malaise. Privatization is not transformation. Unless we radically reform the rules of the economic game—by strengthening competition, protecting investor rights, enforcing contracts, and depoliticizing economic institutions—we will only keep recycling ownership without generating productivity.
Third, this is a test case. If we finally had the spine to separate legacy liabilities and open the door to new investment, why can’t we do the same in the energy sector, where the scale of damage is far worse? Why should ordinary citizens continue to pay inflated bills to fund circular debt and inefficiency?
Finally, the Rs600 billion we are now paying as a nation is not a number. It is a price tag on our failure. It should haunt policymakers, wake up Parliament, and shake the complacency of those still defending other loss-making public assets. What is next? Railways? Steel Mills? WAPDA?
Privatizing PIA is not just a transaction—it is a mirror. And it reflects decades of institutional rot, elite capture, and avoidance of accountability. We should welcome this reform—but only if it becomes the first in a wave of deeper, braver structural changes. Otherwise, we are simply auctioning the debris of a failed state-business compact.
The state must now ask itself: What will we do differently going forward to stop creating the next PIA?