Pakistan Scrubs PIA’s Debt to Lure Investors

Pakistan International Airlines (PIA) is preparing for privatization in November 2025 after years of financial struggles caused by overwhelming debt. The airline had long relied on government bailouts while liabilities soared to over Rs650 billion, equal to 2.3 to 2.5 billion US dollars.

PIA’s Debt Burden

The debts included unpaid bank loans, dues to suppliers, government obligations, and staff payments. This left PIA in negative equity, making it unattractive to investors seeking long-term stability in the aviation sector.

Creation of PIAHCL

To enable privatization, the government shifted nearly all liabilities into Pakistan International Airlines Holding Company Limited (PIAHCL). This transfer removed more than Rs660 billion from PIA’s accounts and reduced negative equity from Rs698 billion to Rs45 billion by April 2024.

Non-Core Assets Transferred

Non-core assets such as real estate holdings, including the Roosevelt Hotel in New York, were also moved to PIAHCL. This restructuring gave the airline a cleaner balance sheet and created the impression of recovery.

Reported Profits Versus Reality

Accounting changes showed an operating profit of PKR 9.3 billion and a net profit of PKR 26.2 billion in 2024. However, these figures stemmed from debt transfers, not real improvements. The airline actually recorded a net loss of Rs4.6 billion that year.

Strategic Privatization Plan

The government is offering 51 to 100 percent of shares with management control to attract bidders. The plan also meets IMF requirements for reforming state-owned enterprises, making privatization both a fiscal necessity and a strategic aviation reform.