PAL Orders 10 More A330s

Manila Bulletin
September 29, 2012

MANILA (Reuters) - Philippine Airlines (PAL) has agreed to buy another $2.5 billion worth of Airbus jets from European Aeronautic Defense and Space Company NV, its president said on Friday, part of the fast-growing carrier's attempt to reclaim dominance of its local market.

The new deal involves the purchase of 10 wide-bodied jets with a list price of $250 million each, Ramon Ang told reporters, on top of the airline's $7-billion Airbus deal with announced in August.

"We are starting to replace our jets with wide-bodied planes because that is what the market wants," Ang told reporters on the sidelines of parent company PAL Holdings Inc.'s stockholders' meeting.

PAL still wants to buy 35 more planes, either from Airbus or Boeing Co., Ang said, in line with its plan to add 100 new jets to its fleet in the next five to seven years as it reshapes its business to take on main rival Cebu Air Inc.

"Our refleeting program right now is close to $10 billion," Ang said. "We exercised our option to buy 10-wide bodied jets (from Airbus) two weeks ago," he said, referring to the new purchases.

San Miguel Corp, which bought a 49 percent stake in PAL and a sister airline in April from Filipino billionaire and brewing rival Lucio Tan in a deal worth about $500 million, controls the management of the airline.

Ang also said San Miguel was considering teaming up with Tan to build a major new airport in the country, a project he said on Friday may cost $5-6 billion.

Ang also said on Friday that San Miguel, the Philippines' most diversified conglomerate, may have to delist three of its units, including flagship San Miguel Brewery Inc., from the local bourse if it failed to meet a minimum float requirement.

PAL Holdings is also likely to be delisted by the end of this year because it will not be able to comply with the free float rule, he said.

The Philippine Stock Exchange has set a Dec. 31 deadline for companies to raise their free float to at least 10 percent in order to avoid penalties such as trading suspension.

"We are trying our best (to see) if we can comply with the minimum requirement, but if not we will go for voluntary delisting," Ang told reporters. "We are having a difficult time."

San Miguel Brewery, San Miguel Properties Inc, San Miguel Pure Foods Co. Inc. are among more than two dozen firms that do not have enough shares floated.

"We would rather that no firm go and delist as their main option," Philippine Stock Exchange President Hans Sicat told Reuters.

For the three San Miguel firms to meet the 10 percent threshold would require issuance of $1.73 billion in new shares, according to Reuters' calculations.

Some firms which have free floats of less than 10 percent are preparing to sell shares in the next few weeks, while others are looking at an option to voluntarily delist.

If companies have not met the requirement by the end of this year, trading in their shares will be halted at the start of 2013, and forced delisting will follow if they fail to enlarge their free floats within the subsequent six months.

Shares in San Miguel Corp erased early losses to end the morning session flat. The broader Manila market was up 0.4 percent.

San Miguel shares have fallen more than 5 percent this year, underperforming the market which gained nearly 22 percent.