Business Mirror
April 18, 2012
A week after San Miguel Corp.’s (SMC) investment in the flag carrier was made public, the board members of Philippine Airlines (PAL) and its holding company PAL Holdings Inc. submitted their courtesy resignations.
“We agreed that it was just right to do so, given the new management that will take over. Almost all from the senior management level submitted courtesy resignations last week,” said a board member. According to the official, PAL has 15 board members and 11 for PAL Holdings.
PAL Holdings is the holding company that controls majority shares of the flag carrier. The 11-man board consists of Lucio C. Tan, Harry C. Tan, Jaime J. Bautista, Lucio K. Tan Jr., Michael G. Tan, Domingo T. Chua, Wilson T. Young, Juanita Tan Lee, and independent directors Antonino L. Alindogan Jr., Enrique O. Cheng and Johnip G. Cua.
The list of PAL board members posted on its web site includes the following: Alindogan Jr., Cheng, Alberto D. Lina and Gregorio T. Yu as independent directors. Other members are Charles C. Chante, Joseph T. Chua, Estelito P. Mendoza, Cesar N. Santos, Washington SyCip, Lucio K. Tan Jr. and Michael G. Tan.
Lucio C. Tan is the chairman and chief executive officer (CEO) of both PAL and PAL Holdings, while Bautista sits as the president for both.
Other PAL officers include Harry Tan as vice chairman and treasurer and Henry So Uy as the deputy CEO.
PAL Holdings CFO, meanwhile, is Susan Tcheng-Lee while the corporate secretary is Cecilia Pesayco.
Under the investments agreements signed by SMC on April 3 with business taipan Lucio C. Tan, the same official disclosed that the concurrent PAL president and chief financial officer (CFO) would be replaced by people from SMC; the concurrent chairman and treasurer of the flag carrier will be retained.
There is no word yet if there would be further changes within the company. “There is no board meeting yet. What is clear is that only the president and CFO positions would have to be vacated,” said another official. It was not clear if SMC would replace the president and CFO of Air Philippines Corp. as well.
The investment agreements would result in the issuance of new shares to the diversified conglomerate for a minority stake in PAL and low-cost partner Air Philippines, which operates Airphil Express.
Under the agreements, Trustmark Holdings Corp. (Trustmark) and Zuma Holdings and Management Corp. (Zuma), the holding companies of PAL and Airphil would issue new shares to San Miguel Equity Investments Inc. (SMEII), a wholly-owned subsidiary of SMC.
Trustmark and Zuma are majority owned by Tan.
SMC, in a disclosure yesterday, said SMEII subscribed to newly issued shares in Trustmark and Zuma, and such subscriptions correspond to a 49-percent equity interest in Trustmark and Zuma.
It added that SMEII would not have a direct equity interest in PAL Holdings; rather it will have resulting proportionate interest in PAL Holdings and PAL, as well as in Airphil, to the extent of its investment in Trustmark and Zuma, respectively.
SMC’s investment in this deal is worth $500 million. “The investment was based on the enterprise value of PAL and Airphil taking into account a discounted cash-flow analysis of the ongoing business of PAL and Airphil.”
As previously disclosed, the investment by SMC, through SMEII, provides an opportunity to diversify into an industry, which has synergies with the company’s existing businesses. “Such investment will likewise augment and supplement the ongoing enhancement of the operations of in PAL and Airphil, and the implementation of the fleet modernization programs with the end view of enhancing the efficiency, competitiveness and profitability of PAL and Airphil.
Wednesday, April 18, 2012
Monday, April 16, 2012
Corporate: Regulator backs San Miguel purchase of PAL stockholder
Business World
April 16, 2012
THE CIVIL AERONAUTICS Board (CAB) has thrown its support behind San Miguel Corp.’s buy-in into flag carrier Philippine Airlines, Inc. (PAL), saying such investments to grow the industry were encouraged.
“I don’t see any regulatory issues here but there are administrative requirements that they have to submit,” CAB Executive Director Carmelo A. Arcilla said in a telephone interview last week.
Requirements, he said, include documents on changes in the corporate structure.
“But in terms of public policy, the government encourages investments in the aviation industry. Seven years ago, we only had two international airlines, now we have six.”
PAL President Jaime B. Bautista had earlier said the planned buy-in“will help the flag carrier in its refleeting program and make the airline more viable and competitive.”
San Miguel and PAL Holdings, Inc., in separate statements had said a deal has been signed for the Ang-led conglomerate to acquire a minority stake in the airline stakeholder for $500 million.
Specifically, San Miguel Investment Holdings, Inc., the conglomerate’s investment vehicle, said that on April 3, it acquired a minority stake in Trustmark Holdings Corp. and Zuma Holdings and Management Corp., which are majority owned by PAL Chairman Lucio C. Tan.
Trustmark Holdings and Zuma Holdings and Management are the holding firms of PAL and budget carrier Airphil, respectively.
The entrance of San Miguel in PAL, in fact, is a positive development, according to Mr. Arcilla.
“It benefits of the riding public to have more options,” Mr. Arcilla said.
“I don’t see any competitive issues here,” he said. “In fact, this is a development that will help the business community.”
Mr. Arcilla cited AirAsia Bhd., the Asia’s biggest low-cost carrier, which, together with Filipino businessmen, set up a budget carrier in 2010 called AirAsia Philippines.
“An example is when we allowed AirAsia to invest in the country. This means that the business community is confident in the aviation industry,” Mr. Arcilla said.
The airline, which started domestic operations last month, is 40% owned by the Malaysian carrier, while 60% are equally owned by Antonio C. Cojuanco, Michael B. Romero, and Marriane B. Hontiveros. -- Cliff Harvey C. Venzon
April 16, 2012
THE CIVIL AERONAUTICS Board (CAB) has thrown its support behind San Miguel Corp.’s buy-in into flag carrier Philippine Airlines, Inc. (PAL), saying such investments to grow the industry were encouraged.
“I don’t see any regulatory issues here but there are administrative requirements that they have to submit,” CAB Executive Director Carmelo A. Arcilla said in a telephone interview last week.
Requirements, he said, include documents on changes in the corporate structure.
“But in terms of public policy, the government encourages investments in the aviation industry. Seven years ago, we only had two international airlines, now we have six.”
PAL President Jaime B. Bautista had earlier said the planned buy-in“will help the flag carrier in its refleeting program and make the airline more viable and competitive.”
San Miguel and PAL Holdings, Inc., in separate statements had said a deal has been signed for the Ang-led conglomerate to acquire a minority stake in the airline stakeholder for $500 million.
Specifically, San Miguel Investment Holdings, Inc., the conglomerate’s investment vehicle, said that on April 3, it acquired a minority stake in Trustmark Holdings Corp. and Zuma Holdings and Management Corp., which are majority owned by PAL Chairman Lucio C. Tan.
Trustmark Holdings and Zuma Holdings and Management are the holding firms of PAL and budget carrier Airphil, respectively.
The entrance of San Miguel in PAL, in fact, is a positive development, according to Mr. Arcilla.
“It benefits of the riding public to have more options,” Mr. Arcilla said.
“I don’t see any competitive issues here,” he said. “In fact, this is a development that will help the business community.”
Mr. Arcilla cited AirAsia Bhd., the Asia’s biggest low-cost carrier, which, together with Filipino businessmen, set up a budget carrier in 2010 called AirAsia Philippines.
“An example is when we allowed AirAsia to invest in the country. This means that the business community is confident in the aviation industry,” Mr. Arcilla said.
The airline, which started domestic operations last month, is 40% owned by the Malaysian carrier, while 60% are equally owned by Antonio C. Cojuanco, Michael B. Romero, and Marriane B. Hontiveros. -- Cliff Harvey C. Venzon
PAL to start HK-Kalibo flights
Business Mirror
Sunday, 15 April 2012 17:04
Lenie Lectura
Sunday, 15 April 2012 17:04
Lenie Lectura
FLAG carrier Philippine Airlines (PAL) is scheduled to operate the Hong Kong-Kalibo route later this month. It said last week it will start mounting flights to its newest route on April 27. The twice weekly service—aimed at further boosting market demand for Boracay—will utilize PAL’s bi-class Airbus A320 aircraft that seats 12 in business class and 144 in economy.
PAL flight PR289 leaves Hong Kong every Tuesday and Friday at 1:20pm and arrive in Kalibo at 3:50pm. The return flight, PR290, departs Kalibo at 4:50pm and arrive in Hong Kong at 7:20pm.
Special introductory fare for round-trip, economy tickets is being offered at HK$1,350.
Separately, PAL announced on Friday that flights covered by the rerouting or contingency flight paths were reverted back to their normal flight paths. The return to “normal flight paths” covering an estimated 12 PAL flights was a result of the rescinding by the CAAP or the Civil Aviation Authority of the Philippines of the NOTAM (Notice to Airmen) which contained the alternative flight paths to be followed by flights traversing the eastern section of Luzon as well as the no-fly zone. The rescinding of the NOTAM is a result of the failed satellite launch by North Korea. In the rescinded Notice to Airmen, flights traversing the eastern section of Luzon must take alternative paths due to the declared “no fly zone” over that part of the country. The no fly zone was originally slated from April 12 to April 16, from 5am to 1pm.
PAL seen breaching 10-million passenger mark this year
(The Philippine Star) Updated April 16, 2012 12:00 AM
MANILA, Philippines - From a full load of five passengers on its maiden flight to Baguio back in 1941, Philippine Airlines (PAL) today has carried more than 300 million passengers over the last seven decades – a feat unequalled by any other local carrier.
From the few brave Filipinos who ventured trying the then novel mode of air transport, today’s regular air travelers – overseas Filipino workers, vacationing families, tourists and businessmen – still prefer flying PAL, if not for the flag carrier’s modern fleet of airplanes but especially for the warm and distinctively Filipino cabin service.
With the number of passengers projected to increase by 12 percent, PAL expects to breach the 10-million-passenger mark by end of 2012. Passenger load factor is likewise expected to improve to about 80 percent for 2012.
With such bright prospects, the airline recently unveiled a new marketing tact that aims to make passengers fall in love with PAL all over again.
“Love, Your PAL” is meant to show PAL’s gratitude to its 300 million passengers as well as an invitation for other air travelers, particularly foreigners, to renew ties with the national flag carrier which has embodied the best that the Philippines can offer to the world.
“Love, Your PAL” will be PAL’s signature for all domestic and outbound communications, providing the emotional message to make Filipinos fall in love with PAL again. The campaign was launched during PAL’s 71st founding anniversary last month.
For the past 70 years, PAL has been the biggest carrier for inbound tourists. Through the new marketing campaign, PAL wants foreign travelers/visitors to fly only the flag carrier because PAL is the showcase of the Philippines.
The airline is the only Philippine-based carrier that flies regularly to North America, Australia and India and offers the most convenient schedules for major regional destinations such as Japan, China, Korea and Southeast Asia.
From the few brave Filipinos who ventured trying the then novel mode of air transport, today’s regular air travelers – overseas Filipino workers, vacationing families, tourists and businessmen – still prefer flying PAL, if not for the flag carrier’s modern fleet of airplanes but especially for the warm and distinctively Filipino cabin service.
With the number of passengers projected to increase by 12 percent, PAL expects to breach the 10-million-passenger mark by end of 2012. Passenger load factor is likewise expected to improve to about 80 percent for 2012.
With such bright prospects, the airline recently unveiled a new marketing tact that aims to make passengers fall in love with PAL all over again.
“Love, Your PAL” is meant to show PAL’s gratitude to its 300 million passengers as well as an invitation for other air travelers, particularly foreigners, to renew ties with the national flag carrier which has embodied the best that the Philippines can offer to the world.
“Love, Your PAL” will be PAL’s signature for all domestic and outbound communications, providing the emotional message to make Filipinos fall in love with PAL again. The campaign was launched during PAL’s 71st founding anniversary last month.
For the past 70 years, PAL has been the biggest carrier for inbound tourists. Through the new marketing campaign, PAL wants foreign travelers/visitors to fly only the flag carrier because PAL is the showcase of the Philippines.
The airline is the only Philippine-based carrier that flies regularly to North America, Australia and India and offers the most convenient schedules for major regional destinations such as Japan, China, Korea and Southeast Asia.
PAL has flown over 300 million passengers safely and comfortably in all routes, and hopes to excite the market with new programs that will strengthen loyalty of its passengers.
As opening salvo of the “Love, Your PAL” marketing campaign, an anniversary sales promo offered big discounts on the purchase of second tickets to selected destinations.
Forthcoming are PAL’s involvement in the Philippine premier of the Broadway musical Phantom of the Opera as well as in the Hollywood commercial screening of the first Filipino full-length film, The Road by GMA Films.
At the PAL anniversary, six of the airline’s best flight stewardesses who epitomize the unique beauty and charm of the Filipina – called the PAL Charisma Girls – were introduced. The Charisma Girls, showing the distinct character of PAL, is a take off from the highly successful 1986 PAL advertising campaign that showcased the “Beauty of the Philippines Shining Through”.
As opening salvo of the “Love, Your PAL” marketing campaign, an anniversary sales promo offered big discounts on the purchase of second tickets to selected destinations.
Forthcoming are PAL’s involvement in the Philippine premier of the Broadway musical Phantom of the Opera as well as in the Hollywood commercial screening of the first Filipino full-length film, The Road by GMA Films.
At the PAL anniversary, six of the airline’s best flight stewardesses who epitomize the unique beauty and charm of the Filipina – called the PAL Charisma Girls – were introduced. The Charisma Girls, showing the distinct character of PAL, is a take off from the highly successful 1986 PAL advertising campaign that showcased the “Beauty of the Philippines Shining Through”.
PAL Opens Hong Kong-Kalibo Route
MANILA, Philippines–Tourists who visit Hong Kong will soon just be a short plane ride away to the world-famous, fine sand beaches of Boracay as Philippine Airlines (PAL) opens a direct Hong Kong-Kalibo flight starting April 27.
The twice weekly service – aimed at further boosting market demand for Boracay – will utilize PAL’s bi-class Airbus A320 aircraft that seats 12 in Business class and 144 in Economy.
PAL flight PR289 leaves Hong Kong every Tuesday and Friday at 1:20 p.m., arriving in Kalibo at3:50 p.m.
The return flight, PR290, departs Kalibo at 4:50 p.m., arriving in Hong Kong at 7:20 p.m.
Special introductory fare for round-trip, economy tickets is being offered at 1,350 Hong Kong dollars.
Only PAL offers Business class and full service on all its narrow-body fleet of 14 A320 jets.
For bookings and inquiries, visit the PAL website – www.philippineairlines.com or call PAL Reservations at 855-8888.
The twice weekly service – aimed at further boosting market demand for Boracay – will utilize PAL’s bi-class Airbus A320 aircraft that seats 12 in Business class and 144 in Economy.
PAL flight PR289 leaves Hong Kong every Tuesday and Friday at 1:20 p.m., arriving in Kalibo at3:50 p.m.
The return flight, PR290, departs Kalibo at 4:50 p.m., arriving in Hong Kong at 7:20 p.m.
Special introductory fare for round-trip, economy tickets is being offered at 1,350 Hong Kong dollars.
Only PAL offers Business class and full service on all its narrow-body fleet of 14 A320 jets.
For bookings and inquiries, visit the PAL website – www.philippineairlines.com or call PAL Reservations at 855-8888.
Friday, April 13, 2012
Outlook Of PAL, AirPhil Express Improves After SMC Buy-In – CAPA
Manila Bulletin
By EDU LOPEZ
April 12, 2012, 5:03pm
MANILA, philippines — The Philippine Airlines (PAL) and low-cost sister carrier AirPhil Express are embarking on a new but still challenging era following the sale of large minority stakes in the two companies to conglomerate San Miguel Corp.
The Center for Asia Pacific Aviation (CAPA) noted that the deal is significant as it provides US$500 million required for fleet renewal and reinvigoration at PAL and for expansion at AirPhil which will be used to fight off increasing low-cost carrier (LCC) competition.
"It is also significant as San Miguel will gain management control of both carriers, which could lead to some adjustments in the group’s strategy," said CAPA.
"The deal hardly comes as a surprise. On numerous occasions, PAL chairman Lucio Tan has looked to sell part of his stake in PAL, of which he took control 20 years ago after the flag carrier was privatized. The latest round of negotiations with San Miguel and one other potential buyer have been dragging on since late last year."
"Industry sources say Mr. Tan was initially reluctant to include AirPhil, which has a brighter outlook than PAL given its focus on the faster growing budget end of the market, and cede management control in either carrier."
"While San Miguel and PAL parent Trustmark Holdings have announced the deal will involve Trustmark and AirPhil parent Zuma Holdings issuing new shares in the two carriers to San Miguel Equity Investments, they have not confirmed exactly how large a stake will change hands."
"Reportedly, San Miguel will end up with stakes between 40% and 49% in both carriers. Zuma now owns all of AirPhil Express while Trustmark owns nearly all of PAL."
CAPA noted that PAL is among the weakest of Asia’s major flag carriers, having seen its share of the Philippine market steadily erode in recent years, and was in need of a recapitalization.
With the US$500 million coming from San Miguel, the carrier will be able to embark on a new business plan that will likely follow a strategy similar to the one used by similarly-sized Garuda Indonesia, said CAPA.
As part of its quantum leap business plan for 2011 to 2015, Garuda is investing in rapid expansion at budget brand Citilink as well as in improving its full-service offering through fleet renewal and premium product enhancements.
Garuda is now in the process of joining the SkyTeam alliance, which has required a complete overhaul of the carrier’s IT systems.
Joining a global alliance, upgrading IT systems and adding more codeshare partners will likely become an important component of the medium to long-term strategy at PAL as the flag carrier looks to expand its international network and improve its premium product, said CAPA.
PAL has said it plans to use the funds coming from San Miguel to renew its fleet, particularly its ageing Boeing 747-400s. The airline already has four additional 777-300ERs on order, which are slated for delivery in the second half of 2012 and 2013.
Some of the US$500 million will likely be used to complete the acquisition of these aircraft while new widebody and narrowbody orders, including for the A320neo, are also possible.
CAPA said that while the Philippine premium market is relatively small, PAL cannot compete directly with the country’s fast-growing LCC sector given its higher unit costs and legacy structure. It needs to differentiate the main PAL brand from local competitors, which are all LCCs and only offer economy class, CAPA added.
Like Garuda, PAL is no longer the largest carrier in its home market. LCC Cebu Pacific Air carries more passengers.
PAL has seen its share of the domestic market slip to about 20%, based on current capacity, while its share of the international market has slipped to about 25%, said CAPA.
The Center for Asia Pacific Aviation (CAPA) noted that the deal is significant as it provides US$500 million required for fleet renewal and reinvigoration at PAL and for expansion at AirPhil which will be used to fight off increasing low-cost carrier (LCC) competition.
"It is also significant as San Miguel will gain management control of both carriers, which could lead to some adjustments in the group’s strategy," said CAPA.
"The deal hardly comes as a surprise. On numerous occasions, PAL chairman Lucio Tan has looked to sell part of his stake in PAL, of which he took control 20 years ago after the flag carrier was privatized. The latest round of negotiations with San Miguel and one other potential buyer have been dragging on since late last year."
"Industry sources say Mr. Tan was initially reluctant to include AirPhil, which has a brighter outlook than PAL given its focus on the faster growing budget end of the market, and cede management control in either carrier."
"While San Miguel and PAL parent Trustmark Holdings have announced the deal will involve Trustmark and AirPhil parent Zuma Holdings issuing new shares in the two carriers to San Miguel Equity Investments, they have not confirmed exactly how large a stake will change hands."
"Reportedly, San Miguel will end up with stakes between 40% and 49% in both carriers. Zuma now owns all of AirPhil Express while Trustmark owns nearly all of PAL."
CAPA noted that PAL is among the weakest of Asia’s major flag carriers, having seen its share of the Philippine market steadily erode in recent years, and was in need of a recapitalization.
With the US$500 million coming from San Miguel, the carrier will be able to embark on a new business plan that will likely follow a strategy similar to the one used by similarly-sized Garuda Indonesia, said CAPA.
As part of its quantum leap business plan for 2011 to 2015, Garuda is investing in rapid expansion at budget brand Citilink as well as in improving its full-service offering through fleet renewal and premium product enhancements.
Garuda is now in the process of joining the SkyTeam alliance, which has required a complete overhaul of the carrier’s IT systems.
Joining a global alliance, upgrading IT systems and adding more codeshare partners will likely become an important component of the medium to long-term strategy at PAL as the flag carrier looks to expand its international network and improve its premium product, said CAPA.
PAL has said it plans to use the funds coming from San Miguel to renew its fleet, particularly its ageing Boeing 747-400s. The airline already has four additional 777-300ERs on order, which are slated for delivery in the second half of 2012 and 2013.
Some of the US$500 million will likely be used to complete the acquisition of these aircraft while new widebody and narrowbody orders, including for the A320neo, are also possible.
CAPA said that while the Philippine premium market is relatively small, PAL cannot compete directly with the country’s fast-growing LCC sector given its higher unit costs and legacy structure. It needs to differentiate the main PAL brand from local competitors, which are all LCCs and only offer economy class, CAPA added.
Like Garuda, PAL is no longer the largest carrier in its home market. LCC Cebu Pacific Air carries more passengers.
PAL has seen its share of the domestic market slip to about 20%, based on current capacity, while its share of the international market has slipped to about 25%, said CAPA.
Tuesday, April 10, 2012
PAL, AirPhil set refleeting programs
Philippine Daily Inquirer
April 10, 2012
By: Doris C. Dumlao
San Miguel chief says project can cost up to $1B
Philippine Airlines, which recently took in the San Miguel Corp as a new investor, is seen investing as much as $1 billion for a fleet modernization program that will make the storied flag carrier more competitive.
Ramon S. Ang, president of SMC who signed a deal last week to acquire 49 percent each of PAL Holdings and Air Philippines Corp., said the conglomerate welcomed “the opportunity to participate in the refleeting and modernization plans of the two airlines.”
In a text message, Ang said the fleet modernization would cost at least $500 million to as much as $1 billion.
The $500-million minimum requirement is what SMC is infusing into several holding firms that will result in its equity investment in PAL and AirPhil, where the conglomerate is expected to exercise management control even if the majority stake would remain with the group of taipan Lucio Tan.
In a statement jointly issued by the Lucio Tan group and SMC, the two groups said the new partnership would “allow the two airlines to strengthen operations and stay competitive with the implementation of PAL and AirPhil’s fleet modernization program.”
Industry sources explained that because SMC’s entry into PAL and AirPhil would involve the issuance of new shares, new money would flow into the carriers. For capital spending beyond $500 million, the source said the airlines could fund this through debt rather than equity so as not to disrupt the existing capital structure.
Based on the latest regulatory filing of PAL Holdings, the flag carrier has the following capital expenditure commitment for the medium term:
PAL has a supplemental agreement with Boeing signed in 2007 relating to its exercise of purchase rights for two Boeing 777-300ER aircraft for delivery in fiscal year 2012.
PAL and Boeing agreed in June 2009 to reschedule the deliveries of four Boeing 777-300ER aircraft from their original delivery schedules of fiscal year 2010, 2011 and 2012 to fiscal years 2013 and 2014.
PAL signed in June last year operating lease agreements for the lease of two Airbus A320-200 aircraft for delivery in March and May 2012. A Letter of Intent was likewise signed in July 2011 for the lease of additional two Airbus A320-200 for delivery in October and November 2012.
Under the deal signed last week, SMC will buy into PAL and AirPhil through several layers of holding companies. This will lead to SMC’s acquisition of 49 percent of PAL’s publicly listed parent firm PAL Holdings that, in turn, will give it an effective control of at least 40 percent of PAL while SMC will also get 49 percent of AirPhil.
PAL Holdings disclosed that its majority shareholder Trustmark Holdings Corp. had entered into investment agreements with a unit of SMC resulting in the issuance of shares to the San Miguel group, where the latter will take a minority stake in PAL Holdings. “The investment through Trustmark will be flowed down to Philippine Airlines, which is expected to strengthen and enhance the operations of the airline,” the disclosure said.
The investment will be made by SMC through a wholly owned unit, San Miguel Equity Investments Inc. (SMEII). Under the agreement, Trustmark and Zuma Holdings and Management Corp. (Zuma)—the holding companies of PAL and AirPhilwill issue new shares to SMEII.
PAL Holdings’ consolidated total comprehensive loss for the nine months of its fiscal year ending Dec. 31, 2011, amounted to P3.6 billion, down 212 percent from a year ago as passenger and cargo revenues declined 13 percent.
April 10, 2012
By: Doris C. Dumlao
San Miguel chief says project can cost up to $1B
Philippine Airlines, which recently took in the San Miguel Corp as a new investor, is seen investing as much as $1 billion for a fleet modernization program that will make the storied flag carrier more competitive.
Ramon S. Ang, president of SMC who signed a deal last week to acquire 49 percent each of PAL Holdings and Air Philippines Corp., said the conglomerate welcomed “the opportunity to participate in the refleeting and modernization plans of the two airlines.”
In a text message, Ang said the fleet modernization would cost at least $500 million to as much as $1 billion.
The $500-million minimum requirement is what SMC is infusing into several holding firms that will result in its equity investment in PAL and AirPhil, where the conglomerate is expected to exercise management control even if the majority stake would remain with the group of taipan Lucio Tan.
In a statement jointly issued by the Lucio Tan group and SMC, the two groups said the new partnership would “allow the two airlines to strengthen operations and stay competitive with the implementation of PAL and AirPhil’s fleet modernization program.”
Industry sources explained that because SMC’s entry into PAL and AirPhil would involve the issuance of new shares, new money would flow into the carriers. For capital spending beyond $500 million, the source said the airlines could fund this through debt rather than equity so as not to disrupt the existing capital structure.
Based on the latest regulatory filing of PAL Holdings, the flag carrier has the following capital expenditure commitment for the medium term:
PAL has a supplemental agreement with Boeing signed in 2007 relating to its exercise of purchase rights for two Boeing 777-300ER aircraft for delivery in fiscal year 2012.
PAL and Boeing agreed in June 2009 to reschedule the deliveries of four Boeing 777-300ER aircraft from their original delivery schedules of fiscal year 2010, 2011 and 2012 to fiscal years 2013 and 2014.
PAL signed in June last year operating lease agreements for the lease of two Airbus A320-200 aircraft for delivery in March and May 2012. A Letter of Intent was likewise signed in July 2011 for the lease of additional two Airbus A320-200 for delivery in October and November 2012.
Under the deal signed last week, SMC will buy into PAL and AirPhil through several layers of holding companies. This will lead to SMC’s acquisition of 49 percent of PAL’s publicly listed parent firm PAL Holdings that, in turn, will give it an effective control of at least 40 percent of PAL while SMC will also get 49 percent of AirPhil.
PAL Holdings disclosed that its majority shareholder Trustmark Holdings Corp. had entered into investment agreements with a unit of SMC resulting in the issuance of shares to the San Miguel group, where the latter will take a minority stake in PAL Holdings. “The investment through Trustmark will be flowed down to Philippine Airlines, which is expected to strengthen and enhance the operations of the airline,” the disclosure said.
The investment will be made by SMC through a wholly owned unit, San Miguel Equity Investments Inc. (SMEII). Under the agreement, Trustmark and Zuma Holdings and Management Corp. (Zuma)—the holding companies of PAL and AirPhilwill issue new shares to SMEII.
PAL Holdings’ consolidated total comprehensive loss for the nine months of its fiscal year ending Dec. 31, 2011, amounted to P3.6 billion, down 212 percent from a year ago as passenger and cargo revenues declined 13 percent.
Sunday, April 8, 2012
PAL's 'Mabuhay' wins 18th award
The Philippine Star
April 8, 2012
Philippine Airlines’ in-flight magazine, Mabuhay, published by Eastgate Publishing recently won another Gold Award for Best Travel Photo from PATA (Pacific Area Travel Association). The award-winning photograph entitled “Coron Island After Sunset” was taken by the Philippines’ top travel photographer, George Tapan, and appeared in Mabuhay magazine’s November 2011 issue. Eastgate’s chairman and publisher is Dr. Charles Chante while its president and editor in chief is Jun Ventura. This latest international recognition is the 18th award won by Eastgate Publishing for Mabuhay magazine since it begun publishing this highly respected publication for PAL in 1988.
Mabuhay magazine can now be downloaded on the App Store and is also available in key bookstores and outlets. Mabuhay’s April issue spotlights “Palawan’s Unrivaled Beauty” with features on a “Practical Guide to Puerto Princesa,” the Underground River, and the new, exciting eco-resort of Mangenguey at the Calamian Islands. Relatively unknown attractions are revealed like the Iwahig Firefly Tour and the Pambato Reef — considered as a mini-Tubattaha Reef (a UNESCO World Heritage site) — that is only 20 minutes away from Palawan’s capital city, Puerto Princesa. The award-winning photo of George Tapan is also re-printed together with Tapan’s photo tip on how he waited for the right moment in taking this now-famous travel image.
Other interesting features of Mabuhay’s April issue are spots where you can discover “Baguio’s Body and Soul,” “Quezon’s Surfing Secret,” Manila’s “Cool Al Fresco Spots,” and a photo essay on “How To Take Summer Shots.”
For PAL’s global destinations, the unique characters of the Japanese cities of Fukuoka and Nagoya are revealed in detail together with features on this fascinating country’s “Top 10 Outdoor Adventures,” “Anime Craze,” and satisfy our curiosity by lifting the veil on a “Life of a Geisha.”
Download or get a copy of Mabuhay’s April issue and get a chance to win a bottle of premium Chilean wine provided by its promoter, Tita Trillo, by answering the in-flight magazine’s wine quiz. It’s a fun quiz where you simply have to answer the titles of movies that had wine themes.
April 8, 2012
Philippine Airlines’ in-flight magazine, Mabuhay, published by Eastgate Publishing recently won another Gold Award for Best Travel Photo from PATA (Pacific Area Travel Association). The award-winning photograph entitled “Coron Island After Sunset” was taken by the Philippines’ top travel photographer, George Tapan, and appeared in Mabuhay magazine’s November 2011 issue. Eastgate’s chairman and publisher is Dr. Charles Chante while its president and editor in chief is Jun Ventura. This latest international recognition is the 18th award won by Eastgate Publishing for Mabuhay magazine since it begun publishing this highly respected publication for PAL in 1988.
Mabuhay magazine can now be downloaded on the App Store and is also available in key bookstores and outlets. Mabuhay’s April issue spotlights “Palawan’s Unrivaled Beauty” with features on a “Practical Guide to Puerto Princesa,” the Underground River, and the new, exciting eco-resort of Mangenguey at the Calamian Islands. Relatively unknown attractions are revealed like the Iwahig Firefly Tour and the Pambato Reef — considered as a mini-Tubattaha Reef (a UNESCO World Heritage site) — that is only 20 minutes away from Palawan’s capital city, Puerto Princesa. The award-winning photo of George Tapan is also re-printed together with Tapan’s photo tip on how he waited for the right moment in taking this now-famous travel image.
Other interesting features of Mabuhay’s April issue are spots where you can discover “Baguio’s Body and Soul,” “Quezon’s Surfing Secret,” Manila’s “Cool Al Fresco Spots,” and a photo essay on “How To Take Summer Shots.”
For PAL’s global destinations, the unique characters of the Japanese cities of Fukuoka and Nagoya are revealed in detail together with features on this fascinating country’s “Top 10 Outdoor Adventures,” “Anime Craze,” and satisfy our curiosity by lifting the veil on a “Life of a Geisha.”
Download or get a copy of Mabuhay’s April issue and get a chance to win a bottle of premium Chilean wine provided by its promoter, Tita Trillo, by answering the in-flight magazine’s wine quiz. It’s a fun quiz where you simply have to answer the titles of movies that had wine themes.
Thursday, April 5, 2012
SMC buys stake in PAL
The Philippine Star
April 5, 2012
By Mary Ann Reyes
In an agreement signed Tuesday night, Trustmark Holdings Corp. and Zuma Holdings and Management Corp., the holding companies of PAL and Air Philippines Corp., respectively, will issue new shares to San Miguel Equity Investments Inc., a wholly owned subsidiary of SMC. Air Phil is PAL’s low cost subsidiary.
Tan, however, will retain chairmanship of PAL.
A joint statement said SMC “welcomes the opportunity to participate in the refleeting and modernization plans of the two airlines.”
PAL spokeswoman Cielo Villaluna said the deal was signed by Tan and SMC president Ramon Ang late Tuesday.
The joint statement, as well as Villaluna’s, did not reveal further details, such as the size of the stake or the amount of money involved. “That is all we are willing to say at the moment,” Villaluna said.
But Ang said his group is forking over $500 million for a 49 percent stake in PAL.
Due to lingering high fuel costs, PAL suffered a total comprehensive loss of $33.5 million for its fiscal year’s third quarter covering October to December 2011.
The flag carrier said total revenues dropped 3.8 percent to $386 million for the third quarter of 2011 compared to the same period in 2010.
Company officials pointed out that during the period, PAL experienced weak passenger demand as well as declining cargo markets as the world economy struggled to recover.
While there were improvements in yields for both passenger and cargo compared with the same period last year, load factors lagged behind, the airline reported.
Total operating expenses amounted to $419.5 million, up by $34.8 million or nine percent over the same quarter in 2010. Jet fuel costs continued to put pressure on the airline’s bottom line as fuel prices rose to $129.75 per barrel in the third quarter from an average of $100.96 per barrel in the same period the previous year.
PAL was also forced to cut hundreds of flights in September after a day-long wildcat strike by ground crew who were protesting the outsourcing of 2,600 catering, airport services and call centre reservation jobs.
It took the airline more than a month to cut the flight backlog.
SMC,, in contrast, is flush with cash and has been aggressively expanding its business portfolio.
The brewer, which is also Southeast Asia’s largest food company, began its successful diversification strategy a decade ago.
Its acquisitions include Petron, the country’s largest oil refiner, US giant Exxon Mobil’s refinery and petrol retail stations in Malaysia, and a third of Manila Electric Co.
SMC has also embarked on infrastructure projects in the Philippines, including the building of toll highways, rail systems and an airport.
Tan and Ang said the development would allow the two airlines to strengthen operations and stay competitive with the implementation of PAL and Air Phil’s fleet modernization program.
April 5, 2012
By Mary Ann Reyes
In an agreement signed Tuesday night, Trustmark Holdings Corp. and Zuma Holdings and Management Corp., the holding companies of PAL and Air Philippines Corp., respectively, will issue new shares to San Miguel Equity Investments Inc., a wholly owned subsidiary of SMC. Air Phil is PAL’s low cost subsidiary.
Tan, however, will retain chairmanship of PAL.
A joint statement said SMC “welcomes the opportunity to participate in the refleeting and modernization plans of the two airlines.”
PAL spokeswoman Cielo Villaluna said the deal was signed by Tan and SMC president Ramon Ang late Tuesday.
The joint statement, as well as Villaluna’s, did not reveal further details, such as the size of the stake or the amount of money involved. “That is all we are willing to say at the moment,” Villaluna said.
But Ang said his group is forking over $500 million for a 49 percent stake in PAL.
Due to lingering high fuel costs, PAL suffered a total comprehensive loss of $33.5 million for its fiscal year’s third quarter covering October to December 2011.
The flag carrier said total revenues dropped 3.8 percent to $386 million for the third quarter of 2011 compared to the same period in 2010.
Company officials pointed out that during the period, PAL experienced weak passenger demand as well as declining cargo markets as the world economy struggled to recover.
While there were improvements in yields for both passenger and cargo compared with the same period last year, load factors lagged behind, the airline reported.
Total operating expenses amounted to $419.5 million, up by $34.8 million or nine percent over the same quarter in 2010. Jet fuel costs continued to put pressure on the airline’s bottom line as fuel prices rose to $129.75 per barrel in the third quarter from an average of $100.96 per barrel in the same period the previous year.
PAL was also forced to cut hundreds of flights in September after a day-long wildcat strike by ground crew who were protesting the outsourcing of 2,600 catering, airport services and call centre reservation jobs.
It took the airline more than a month to cut the flight backlog.
SMC,, in contrast, is flush with cash and has been aggressively expanding its business portfolio.
The brewer, which is also Southeast Asia’s largest food company, began its successful diversification strategy a decade ago.
Its acquisitions include Petron, the country’s largest oil refiner, US giant Exxon Mobil’s refinery and petrol retail stations in Malaysia, and a third of Manila Electric Co.
SMC has also embarked on infrastructure projects in the Philippines, including the building of toll highways, rail systems and an airport.
Tan and Ang said the development would allow the two airlines to strengthen operations and stay competitive with the implementation of PAL and Air Phil’s fleet modernization program.
SMC signs deal to buy stake in PAL
Philippine Daily Inquirer
April 5, 2012
By Doris C. Dumalo
DIVERSIFYING San Miguel Corp. has signed as $500-million deal to acquire a significant stake in flag carrier Philippine Airlines and affiliate budget carrier Air Philippines Corp., thus teaming up with the Lucio Tan group for the modernization and refleeting of the carriers.
In a statement jointly issued by the Lucio Tan camp and SMC, the two groups said the new partnership would "allow the two airlines to strenghten operations and stay competitive with the implementation of PAL and AirPhil's fleet modernization program."
Under the deal, SMC will buy into PAL and AirPhil through several layers of holding comapnies. This will lead to SMC's acquisition of 49 percent of PAL's publicly listed parent firm PAL Holdings that, in turn, will give it an effective control of a least 40 percent of PAL, according to SMC president Ramon S. Ang. He added that as part of the package,SMC would get 49 percent of Airphil.
The SMC chief confirmed that SMC would pay $500 million to buy the indirect stakes in PAL and AirPhil. The conglomerate is also expected to exercise management control over the airlines. When asked when SMC would take over, Ang said it would be "after the (Lenten) Holidays."
Ang, who had been in talks with Tan for the partnership for many years, said SMC welcomed "the opportunity to participate in the refleeting and modernization plans for the two airlines."
"For Philippine Airlines, the entry of SMC may enhance its refleeting strategy given the cash-rich balance sheet of acquiring conglomerate. The airline may also explore potancial strategies with other key assets of research at local stockbrokerage Campos Lanuza & Co.
San Miguel is involved with the modernization of the Godofredo P. Ramos airport on Caticlan, the main gateway to the world-famous Boracay Island. This was the first privatilized airport terminal operations in the Philippines. SMC has also expressed interest to participate in the bidding for other public-private partnership airport contracts.
In making this investment, SMC is betting on a heavy influx of tourists in the coming years.
Lacson said that for Tan, the deal might also open up opportunities to acquire a stake in San Miguel Brewery. Tan owns Asia Brewery, which offers some competition to SMB, the undisputed market leader in the local beer market, he pointed out.
For veteran stock broker Ismael Cruz, president of IGC Securities, the most significant impact of the deal was that the national flag carrier would remain in Filipino hands.
"SMC has said it will not break up the company. PAL being the first airline in Asia that means being Filipino, we will keep it as one airline company that will remain in Filipino hands," Cruz said.
Manuel P. Pangilinan and tycoon John Gokongwei, whose family controls budget carrier Cebu Air, have likewise expressed interest in buying into PAL.
In a disclosure to the Philippine Stock Exchange yesterday, PAL's parent company PAL Holdings disclosed that its majority shareholder Trustmark Holdings Corp. had entered into investment agreements with a unit of SMC resulting in the issuance of shares to the San Miguel group, where the latter will take a minority stake in PAL Holdings.
"The investment through Trustmark will be flowed down to Philippine Airlines, which is expected to strengthen and enhance the operations of the airline," the PAL Holdings disclosure said.
The investment will be made by SMC through a wholly owned unit, San Miguel Equity INvestments Inc. (SMEII). Under the agreement, Trustmark and Zuma Holdings and Management Corp. (Zuma) - the holding companies of PAL and AirPhil - will issue new shares to SMEII.
April 5, 2012
By Doris C. Dumalo
DIVERSIFYING San Miguel Corp. has signed as $500-million deal to acquire a significant stake in flag carrier Philippine Airlines and affiliate budget carrier Air Philippines Corp., thus teaming up with the Lucio Tan group for the modernization and refleeting of the carriers.
In a statement jointly issued by the Lucio Tan camp and SMC, the two groups said the new partnership would "allow the two airlines to strenghten operations and stay competitive with the implementation of PAL and AirPhil's fleet modernization program."
Under the deal, SMC will buy into PAL and AirPhil through several layers of holding comapnies. This will lead to SMC's acquisition of 49 percent of PAL's publicly listed parent firm PAL Holdings that, in turn, will give it an effective control of a least 40 percent of PAL, according to SMC president Ramon S. Ang. He added that as part of the package,SMC would get 49 percent of Airphil.
The SMC chief confirmed that SMC would pay $500 million to buy the indirect stakes in PAL and AirPhil. The conglomerate is also expected to exercise management control over the airlines. When asked when SMC would take over, Ang said it would be "after the (Lenten) Holidays."
Ang, who had been in talks with Tan for the partnership for many years, said SMC welcomed "the opportunity to participate in the refleeting and modernization plans for the two airlines."
"For Philippine Airlines, the entry of SMC may enhance its refleeting strategy given the cash-rich balance sheet of acquiring conglomerate. The airline may also explore potancial strategies with other key assets of research at local stockbrokerage Campos Lanuza & Co.
San Miguel is involved with the modernization of the Godofredo P. Ramos airport on Caticlan, the main gateway to the world-famous Boracay Island. This was the first privatilized airport terminal operations in the Philippines. SMC has also expressed interest to participate in the bidding for other public-private partnership airport contracts.
In making this investment, SMC is betting on a heavy influx of tourists in the coming years.
Lacson said that for Tan, the deal might also open up opportunities to acquire a stake in San Miguel Brewery. Tan owns Asia Brewery, which offers some competition to SMB, the undisputed market leader in the local beer market, he pointed out.
For veteran stock broker Ismael Cruz, president of IGC Securities, the most significant impact of the deal was that the national flag carrier would remain in Filipino hands.
"SMC has said it will not break up the company. PAL being the first airline in Asia that means being Filipino, we will keep it as one airline company that will remain in Filipino hands," Cruz said.
Manuel P. Pangilinan and tycoon John Gokongwei, whose family controls budget carrier Cebu Air, have likewise expressed interest in buying into PAL.
In a disclosure to the Philippine Stock Exchange yesterday, PAL's parent company PAL Holdings disclosed that its majority shareholder Trustmark Holdings Corp. had entered into investment agreements with a unit of SMC resulting in the issuance of shares to the San Miguel group, where the latter will take a minority stake in PAL Holdings.
"The investment through Trustmark will be flowed down to Philippine Airlines, which is expected to strengthen and enhance the operations of the airline," the PAL Holdings disclosure said.
The investment will be made by SMC through a wholly owned unit, San Miguel Equity INvestments Inc. (SMEII). Under the agreement, Trustmark and Zuma Holdings and Management Corp. (Zuma) - the holding companies of PAL and AirPhil - will issue new shares to SMEII.
SMC paying $500M to acquire 49% stake in PAL, AirPhil
Manila Bulletin
April 5, 2012
By James A. Loyola
San Miguel Corporation (SMC) has signed investment agreements with business taipan Lucio Tan for the acquisition of a minority stake in flag carrier Philippine Airline Inc. (PAL) and low-cost partner Air Philippines Corporation ( Air Phil) for $500 million.
SMC President Ramon S. Ang confirmed in a mobile message that SMC will be acquiring shares equivalent to a 49 percent interest in PAL and AirPhil.
In a joint statement, SMC and Tan said that the agreements will result in the issuance of new shares to the diversified conglomerate.
The agreements were signed late Tuesday.
Under the agreement, Trustmark Holdings Corporation (Zuma), Tan's holding companies of PAL and Air Phil, will issue new shares to San Miguel Equity Investments Inc., a wholly owned subsidiary or SMC.
Tan and SMC President Ramon S. Ang said the new investment will allow the two airlines to strengthen operations and stay competitive with the implementation of PAL and Air Phil's fleet modernization program.
Ang said San Miguel welcomes the opportunity to participate in the refleeting and modernization plans of the two airlines.
SMC chief fiance officer Ferdinand K. Constantino said earlier that this investment is "in preparation for the projected heavy influx of tourists in the coming year which will be beneficial to the tourist industry of the country."
San Miguel's investment "will help the flag carrier in its refleeting program and make the airline more viable and competitive," Philippine Airline President Jaime Bautista said in an e-mailed statement.
The deal is milestone in Philippine business since Tan's Asia Brewery and Tanduay Distillers are rival of SMC's traditional beer and liquor businesses, San Miguel Brewery Inc. and Ginebra San Miguel. Tan controls listed PAL Holdings which directly owns 82 percent of Philippine Airlines which has been steadily losing market shares to budget airlines led by Cebu Pacific.
PAL has recently become more attractive to investors after having successfully resorted to outsourcing key services to leave the company leaner and more cost efficient.
If PAL holding issues shares for the prospective SMC investment, it may also help the firm comply with the PSE's minimum public float requirement. Tan has assured that they intend to comply with that requirement.
PAL reported a net loss of $33.5 million in the three months ending December, reserving a profit of $15.1 million the previous year.
It had said the losses were mainly due to soaring fuel costs and made known it was looking for fresh money to upgrade its fleet, which has lost its status as the nation's most popular carrier to low-cost rival Cebu Pacific.
PAL was also forced to cut hundreds of flights in September after a day-long wildcat strike by ground crew who were protesting the outsourcing of 2,600 catering, airport services and call center reservation jobs.
It took the airline more than a month to cut the flight backlog.
San Miguel, in contrast, is flush with cash and has been aggressively expanding its business portfolio.
The brewer, which is also Southeast Asia's largest food company, began its successful diversification strategy a decade ago.
Its acquisition include Petron, the country's largest oil refiner, US giant ExxonMobil's refinery and petrol retail station in Malaysia, and a third of Manila Electric, the Philippines' largest power destributor.
San Miguel has also embarked on infrastructure projects in the Philippines, including the building of troll highways, rail systems and an airport.
The purchase eould support Ang's goal of increasing sales to 1 trillion pesos ($23billion) by 2016 through expansion beyond its main food and brewing business into industries such as oil, power and infrastructure. It will help unprofitable Philippine Air raise funds to add planes and routes amid market share losses to budget airline Cebu Air Inc. and increased competition from AirAsia Bhd.
"It might take time to recover the investment, but given the outlook on tourism and infrastructure, PAL should eventually contribute to San Miguel's bottomline," Jonathan Ravelas, chief market strategies at BDO Unibank Inc. in Manila, said before the announcement. "San Miguel wants to be an integrator by putting up a complete infrastructure offering."
"San Miguel won't invest unless it knows it would eventually get control," said Jose Vistan, research head at AB Capital Securities Inc. "It's coming in as a minority investor, but will capital raising or some arrangement, San Miguel will likely gain control eventually." (With Bloomberg repot)
April 5, 2012
By James A. Loyola
San Miguel Corporation (SMC) has signed investment agreements with business taipan Lucio Tan for the acquisition of a minority stake in flag carrier Philippine Airline Inc. (PAL) and low-cost partner Air Philippines Corporation ( Air Phil) for $500 million.
SMC President Ramon S. Ang confirmed in a mobile message that SMC will be acquiring shares equivalent to a 49 percent interest in PAL and AirPhil.
In a joint statement, SMC and Tan said that the agreements will result in the issuance of new shares to the diversified conglomerate.
The agreements were signed late Tuesday.
Under the agreement, Trustmark Holdings Corporation (Zuma), Tan's holding companies of PAL and Air Phil, will issue new shares to San Miguel Equity Investments Inc., a wholly owned subsidiary or SMC.
Tan and SMC President Ramon S. Ang said the new investment will allow the two airlines to strengthen operations and stay competitive with the implementation of PAL and Air Phil's fleet modernization program.
Ang said San Miguel welcomes the opportunity to participate in the refleeting and modernization plans of the two airlines.
SMC chief fiance officer Ferdinand K. Constantino said earlier that this investment is "in preparation for the projected heavy influx of tourists in the coming year which will be beneficial to the tourist industry of the country."
San Miguel's investment "will help the flag carrier in its refleeting program and make the airline more viable and competitive," Philippine Airline President Jaime Bautista said in an e-mailed statement.
The deal is milestone in Philippine business since Tan's Asia Brewery and Tanduay Distillers are rival of SMC's traditional beer and liquor businesses, San Miguel Brewery Inc. and Ginebra San Miguel. Tan controls listed PAL Holdings which directly owns 82 percent of Philippine Airlines which has been steadily losing market shares to budget airlines led by Cebu Pacific.
PAL has recently become more attractive to investors after having successfully resorted to outsourcing key services to leave the company leaner and more cost efficient.
If PAL holding issues shares for the prospective SMC investment, it may also help the firm comply with the PSE's minimum public float requirement. Tan has assured that they intend to comply with that requirement.
PAL reported a net loss of $33.5 million in the three months ending December, reserving a profit of $15.1 million the previous year.
It had said the losses were mainly due to soaring fuel costs and made known it was looking for fresh money to upgrade its fleet, which has lost its status as the nation's most popular carrier to low-cost rival Cebu Pacific.
PAL was also forced to cut hundreds of flights in September after a day-long wildcat strike by ground crew who were protesting the outsourcing of 2,600 catering, airport services and call center reservation jobs.
It took the airline more than a month to cut the flight backlog.
San Miguel, in contrast, is flush with cash and has been aggressively expanding its business portfolio.
The brewer, which is also Southeast Asia's largest food company, began its successful diversification strategy a decade ago.
Its acquisition include Petron, the country's largest oil refiner, US giant ExxonMobil's refinery and petrol retail station in Malaysia, and a third of Manila Electric, the Philippines' largest power destributor.
San Miguel has also embarked on infrastructure projects in the Philippines, including the building of troll highways, rail systems and an airport.
The purchase eould support Ang's goal of increasing sales to 1 trillion pesos ($23billion) by 2016 through expansion beyond its main food and brewing business into industries such as oil, power and infrastructure. It will help unprofitable Philippine Air raise funds to add planes and routes amid market share losses to budget airline Cebu Air Inc. and increased competition from AirAsia Bhd.
"It might take time to recover the investment, but given the outlook on tourism and infrastructure, PAL should eventually contribute to San Miguel's bottomline," Jonathan Ravelas, chief market strategies at BDO Unibank Inc. in Manila, said before the announcement. "San Miguel wants to be an integrator by putting up a complete infrastructure offering."
"San Miguel won't invest unless it knows it would eventually get control," said Jose Vistan, research head at AB Capital Securities Inc. "It's coming in as a minority investor, but will capital raising or some arrangement, San Miguel will likely gain control eventually." (With Bloomberg repot)
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