1
TWELVE years ago, I had written in these pages that PIA’s (then) annual loss of Rs33 billion was more than the cost of a fully loaded Boeing 777. Since then, we have watched that ‘B777-sized hole’ in our national exchequer grow into a systemic abyss. For over a decade, the discourse remained stagnant: we could not muster the political courage to clean the balance sheet that would unhitch the airline. All this while our regional competitors built global empires on the back of our diaspora. Today, the jinx is finally broken. The Rs135bn bid by a private consortium for a 75 per cent stake in PIA is more than a standard divestment; it is a recapitalisation event that can potentially transform the airline’s DNA.
Unlike typical selling of state assets, this is a balance sheet restructuring exercise. Of the Rs135bn bid, Rs125bn is slated for direct injection into the airline’s operations as fresh equity. This is the “one-time bailout … against a sound business plan” that I had advocated for in my 2013 article in this paper. By carving out Rs654bn in legacy debt into a separate holding company last year, the government created a ‘clean PIA’ that would be attractive to investors. The new money can be invested where it matters most: fuel-efficient engines, aircraft interiors and technology stack.
The government’s decision to retain a 25pc stake represents a fundamental shift in the state’s role. For decades, the government was the ‘funder of last resort’, writing cheques to cover deficit after deficit in a cycle of despair.
Now, the state becomes a beneficiary of dividends and future increases in value with the increasing share price. If the consortium succeeds in expanding the active fleet from its current emaciated state to the 50-plus aircraft — required for regional dominance — the upside for the government is enormous. If PIA hits an industry-standard valuation multiple of 8 x (EV/EBITDA) in five years, then the government’s 25pc stake could eventually be worth more than the original value of the entire airline today. The region’s high-growth and efficient carriers (like Ryanair and IndiGo) trade at eight to 10 times earnings. This is how sovereign wealth is actually protected, not by holding 100pc of a carcass, but by owning a quarter of a soaring enterprise.
A grounded aircraft costs thousands of dollars per hour.
The “alluring, captive market” of the Pakistani diaspora remains the airline’s crown jewel. While we have conceded two-thirds of this market to Gulf carriers, the new liquidity allows for a massive offensive to win it back. To do so, the new management must focus on CASK compression — reducing the Cost per Available Seat Kilometre. By lowering this metric towards the global benchmark of three to five cents through fuel-efficient aircraft and modern technology stacks, PIA can finally close the yield gap. Furthermore, breaking free from the shackles of the restrictive Public Procurement Regulatory Authority rules is a game-changer. In the global aviation industry, a grounded aircraft costs thousands of dollars per hour. Under private control, management finally has the “free hand” to negotiate spare parts and maintenance contracts at commercial speeds rather than bureaucratic ones.
You can make the best strategy but it will get eaten for breakfast by culture. You can’t change an organisation’s culture with a new mission statement on the wall. You change it through rituals. For example: a daily 15-minute ‘on-time performance’ huddle where the CEO listens to the mechanics. This is the most daunting task for the new owners. Not the technical upgrades for commercial turnaround but the delayering of the permafrost. In a legacy state-owned enterprise like PIA, middle management often functions as a layer of permanent resistance.
The middle layers value bureaucratic compliance over meritocratic performance because com-pliance is safe. The airline’s management hierarchy will need to be flattened from a vertical pyramid into a horizontal, agile network.
In order to be efficient and competitive, the airline must move from a system where managers supervise to one where they accelerate the front-line staff who actually interact with passengers.
This ‘meritocratic compact’ is the only way to re-engage the thousands of talented PIA employees who have been stifled by the system. If the ‘clean balance sheet’ provides the fuel and the Arif Habib consortium provides the engine, it is this cultural shift that will provide the wings. The era of the ‘gatekeeper’ must end to make way for the era of the ‘enabler’.
If the new owners manage the human capital with the same rigour they applied to their financial bid, we may finally see the return of an airline once Great People to Fly With.
The writer is a business strategist and entrepreneur.
Published in Dawn, December 30th, 2025
