Manila Bulletin
By JAMES A. LOYOLA
Philippine Airlines (PAL) aims to beat rival carrier Cebu Pacific Air to the draw by aiming to start flying the Manila to New York route in three months-notwithstanding the Philippines' Category 2 status.
In an interview, PAL President Ramon S. Ang said cryptically that they already have a way to overcome this obstacle adding that “we assure you, we will be the first to come out with Manila-New York flights.“
Ang said PAL also intends to use its new Boeing 777-300ER to fly Manila-Toronto and Toronto-Manila non-stop. The carrier already has two of the long-haul aircraft and has ordered four more, of which two will be delivers this year and two more next year.
“We hope we can resolve quickly the category 2 issue so we can go to Europe including London, Paris, Rome,” said Ang.
Ang said he is confident of being able to turnaround PAL’s finances so that it will be profitable, together with
its budget unit Air Philippines, in just one year after San Miguel Corporation invested in it.
He said profitability can be boosted by improving PAL’s system of selling tickets, to get better yield and pricing, as well as by lowering cost through better aircraft utilization.
“From an average of 10 hours per aircraft, we will raise utilization up to 16 hours,” said Ang.
He added that, “in a year or two, PAL will have the most beautiful flight attendants in Asia” as the airline plans to woo more passengers by having the best service, newest aircraft and the best food on board.
PAL intends to acquire 100 aircraft in the next five years. Aside from the new 777-300ERs, the carrier has also order four additional Airbus A320s in preparation for the expansion of its route network. The expansion and modernization program will be bankrolled by the $500 million SMC will be infusing into the airline. Last month, San Miguel Equity Investments Inc. entered into investment agreements with Lucio Tan's Trustmark Holdings Corporation and Zuma Holdings and Management Corp. giving SMC a 49 percent stake in PAL and AirPhil.
Showing posts with label Business Issues. Show all posts
Showing posts with label Business Issues. Show all posts
Saturday, May 12, 2012
Friday, May 11, 2012
PAL seen getting back in the black in a year
Philippine Daily Inquirer
May 11, 2012
By: Doris C. Dumlao
SMC confident it can reverse airline’s fortune.
Flag carrier Philippine Airlines can turn profitable again in just one year, even by just using the existing fleet now under the management control of San Miguel Corp., SMC chief Ramon S. Ang said.
“Based on the existing fleet, we are already confident we can turn it around,” Ang told reporters Thursday after the stockholders’ meeting of SMC’s hard liquor unit, Ginebra San Miguel Inc.
“PAL is a very good company and a very good brand,” he said.
PAL’s return to profitability one year after SMC’s takeover, Ang said, would be achieved through the implementation of a better sales and ticketing system and reduction in cost through higher utilization of aircraft.
He said PAL would implement a “better system of selling to get a better yield and better pricing.”
Ang also said that operating costs could be significantly reduced by increasing aircraft utilization from about 10.5 hours per day to 12 to as high as 16 hours daily, in line with international benchmarks.
Doing so would help achieve PAL’s turnaround even before the planned refleeting program that Ang had extensively discussed.
Two previously purchased Boeing 777-300E7 planes are set to arrive this year.
Ang, who recently became chief executive officer of PAL, added that he would find ways to review current routes and introduce non-stop Manila-New York flights in the next three months.
“We hope to go to Toronto this year,” Ang said, adding that PAL hoped to resolve international aviation woes so that the flag carrier will be able to fly to European cities like London, Paris and Rome.
The European Union currently disallows carriers from the Philippines, Honduras and the two Congos to fly to its jurisdiction.
Since 2008, the US Federal Aviation Administration has also downgraded the Philippines to Category 2 safety, effectively banning local carriers from expanding their operations in the United States.
With the Category 2 status in force, PAL is limited to various destinations in the US, including Los Angeles, San Francisco, Honolulu, Guam and Las Vegas via Vancouver.
But Ang said SMC was “doing something” to be able to fly to new destinations in the United States.
May 11, 2012
By: Doris C. Dumlao
SMC confident it can reverse airline’s fortune.
Flag carrier Philippine Airlines can turn profitable again in just one year, even by just using the existing fleet now under the management control of San Miguel Corp., SMC chief Ramon S. Ang said.
“Based on the existing fleet, we are already confident we can turn it around,” Ang told reporters Thursday after the stockholders’ meeting of SMC’s hard liquor unit, Ginebra San Miguel Inc.
“PAL is a very good company and a very good brand,” he said.
PAL’s return to profitability one year after SMC’s takeover, Ang said, would be achieved through the implementation of a better sales and ticketing system and reduction in cost through higher utilization of aircraft.
He said PAL would implement a “better system of selling to get a better yield and better pricing.”
Ang also said that operating costs could be significantly reduced by increasing aircraft utilization from about 10.5 hours per day to 12 to as high as 16 hours daily, in line with international benchmarks.
Doing so would help achieve PAL’s turnaround even before the planned refleeting program that Ang had extensively discussed.
Two previously purchased Boeing 777-300E7 planes are set to arrive this year.
Ang, who recently became chief executive officer of PAL, added that he would find ways to review current routes and introduce non-stop Manila-New York flights in the next three months.
“We hope to go to Toronto this year,” Ang said, adding that PAL hoped to resolve international aviation woes so that the flag carrier will be able to fly to European cities like London, Paris and Rome.
The European Union currently disallows carriers from the Philippines, Honduras and the two Congos to fly to its jurisdiction.
Since 2008, the US Federal Aviation Administration has also downgraded the Philippines to Category 2 safety, effectively banning local carriers from expanding their operations in the United States.
With the Category 2 status in force, PAL is limited to various destinations in the US, including Los Angeles, San Francisco, Honolulu, Guam and Las Vegas via Vancouver.
But Ang said SMC was “doing something” to be able to fly to new destinations in the United States.
Ang vows to turn PAL around in 1 year
The Philippine Star
May 11, 2012
“PAL is a good airline and brand. We’re confident we can turn PAL and its sister budget carrier Air Philippines around in a year. Give me a year or two, PAL will have the most beautiful FAs (flight attendants) and the best service,” said Ang, who earned a reputation for engineering business turnarounds.
Ang said he continues to hold dialogues with PAL management to further professionalize the airline’s operations and boost its revenues as part of its turnaround plan. Specifically, he wants to improve airline ticketing, increase efficiencies and customer satisfaction.
He also wants to maintain a high daily aircraft utilization rate, which measures the number of flight hours they use the aircraft per day, from the existing 10 1/2 hours to 12-16 hours.
Ang explained that higher daily aircraft utilization will allow PAL to maximize the amount of revenues it generates from its aircraft and, in turn, develop schedules that will enable it to increase average hours flown per day.
Under its plan, PAL is planning to beef up its fleet with the acquisition of up to 100 new aircraft over the next five years. For this year, around eight Airbus A320 planes and two Boeing 777-300s will arrive. Another two Boeing 777-300s will come on line next year.
Part of the plan is to fly non-stop to New York from Manila within the next three months.
Ang said PAL is also hoping to resume flights to Europe, the Middle East as well as the East Coast of the United States as he expressed confidence the Philippines can restore the country to US Category 1 status. “We hope to fly to Toronto within the year,” he said.
The US Federal Aviation agency downgraded the Philippines’ status to Category 2 due to the local regulator’s in ability to implement safety standards.
The ambitious refleeting program will be funded by San Miguel’s recent infusion of $500 million in the airline, plus a fresh $500 million from both San Miguel and the group of tycoon Lucio Tan, which still owns 51 percent of PAL. - By Zinnia B. Dela Peña (Philstar News Service, www.philstar.com)
May 11, 2012
“PAL is a good airline and brand. We’re confident we can turn PAL and its sister budget carrier Air Philippines around in a year. Give me a year or two, PAL will have the most beautiful FAs (flight attendants) and the best service,” said Ang, who earned a reputation for engineering business turnarounds.
Ang said he continues to hold dialogues with PAL management to further professionalize the airline’s operations and boost its revenues as part of its turnaround plan. Specifically, he wants to improve airline ticketing, increase efficiencies and customer satisfaction.
He also wants to maintain a high daily aircraft utilization rate, which measures the number of flight hours they use the aircraft per day, from the existing 10 1/2 hours to 12-16 hours.
Ang explained that higher daily aircraft utilization will allow PAL to maximize the amount of revenues it generates from its aircraft and, in turn, develop schedules that will enable it to increase average hours flown per day.
Under its plan, PAL is planning to beef up its fleet with the acquisition of up to 100 new aircraft over the next five years. For this year, around eight Airbus A320 planes and two Boeing 777-300s will arrive. Another two Boeing 777-300s will come on line next year.
Part of the plan is to fly non-stop to New York from Manila within the next three months.
Ang said PAL is also hoping to resume flights to Europe, the Middle East as well as the East Coast of the United States as he expressed confidence the Philippines can restore the country to US Category 1 status. “We hope to fly to Toronto within the year,” he said.
The US Federal Aviation agency downgraded the Philippines’ status to Category 2 due to the local regulator’s in ability to implement safety standards.
The ambitious refleeting program will be funded by San Miguel’s recent infusion of $500 million in the airline, plus a fresh $500 million from both San Miguel and the group of tycoon Lucio Tan, which still owns 51 percent of PAL. - By Zinnia B. Dela Peña (Philstar News Service, www.philstar.com)
San Miguel looking to list energy unit, revitalize PAL
Business World
May 11, 2012
DIVERSIFIED conglomerate San Miguel Corp. may revive plans to take its energy unit public this year, its president yesterday said, and is also looking to a quick return to profit for its newly acquired aviation business.
San Miguel’s Ramon S. Ang, in a chance interview on Tuesday, said the company remained interested in an initial public offering for SMC Global Power Holdings Corp.
"We will try if we can, who doesn’t want money?" Mr. Ang said in Filipino when asked if the listing could push through this year.
SMC Global Power President Alan T. Ortiz last November said IPO plans would be deferred amid volatile market conditions.
Mr. Ang, meanwhile, yesterday bared plans to boost the operations and profits of Philippine Airlines after San Miguel acquired a 49% stake in PAL Holdings, Inc., last month.
"We are confident that we will be able to turn around PAL within a year from our first investment," he told reporters following the annual stockholders’ meeting of San Miguel liquor unit Ginebra San Miguel, Inc.
PAL Holdings’ nine-month losses stood at P3.629 billion last year, a reversal of the P3.237 billion in net income recorded the previous year.
Mr. Ang said route additions and modifications were being considered, including a non stop Manila-to-New York flight pending the removal of the country’s Category 2 status -- indicating non-compliance with international safety standards -- imposed by the US-based Federal Aviation Administration.
Long-term plans for profitability include a "better ticket sale system" to bring down expenses and to improve yields, and increasing the daily aircraft usage from the current average of 10.5 hours per day to roughly 12 to 16 hours per day in a bid to reduce costs, Mr. Ang added.
He said PAL also hoped to close a deal for a five-year re-fleeting program.
"What we want to do is to close the deal as soon as possible for the 100 units we will order. Most of the new airplanes will replace the old airplanes, while others will be reserved for expansion," Mr. Ang said.
He said two Boeing 777-300ERs and eight Airbus 320s were expected to join the PAL fleet this year, having been previously purchased by the previous management.
Moving forward, Mr. Ang said he was confident that the public would again view the company with favor despite recent labor issues.
"PAL is a very good company and a very good brand. Despite all that it has been through, it seems many people still want to ride PAL again," he claimed.
San Miguel shares lost 0.44% to P113.50 yesterday from P114.00 on Wednesday. -- Franz Jonathan G. de la Fuente and Cliff Harvey C. Venzon
May 11, 2012
DIVERSIFIED conglomerate San Miguel Corp. may revive plans to take its energy unit public this year, its president yesterday said, and is also looking to a quick return to profit for its newly acquired aviation business.
San Miguel’s Ramon S. Ang, in a chance interview on Tuesday, said the company remained interested in an initial public offering for SMC Global Power Holdings Corp.
"We will try if we can, who doesn’t want money?" Mr. Ang said in Filipino when asked if the listing could push through this year.
SMC Global Power President Alan T. Ortiz last November said IPO plans would be deferred amid volatile market conditions.
Mr. Ang, meanwhile, yesterday bared plans to boost the operations and profits of Philippine Airlines after San Miguel acquired a 49% stake in PAL Holdings, Inc., last month.
"We are confident that we will be able to turn around PAL within a year from our first investment," he told reporters following the annual stockholders’ meeting of San Miguel liquor unit Ginebra San Miguel, Inc.
PAL Holdings’ nine-month losses stood at P3.629 billion last year, a reversal of the P3.237 billion in net income recorded the previous year.
Mr. Ang said route additions and modifications were being considered, including a non stop Manila-to-New York flight pending the removal of the country’s Category 2 status -- indicating non-compliance with international safety standards -- imposed by the US-based Federal Aviation Administration.
Long-term plans for profitability include a "better ticket sale system" to bring down expenses and to improve yields, and increasing the daily aircraft usage from the current average of 10.5 hours per day to roughly 12 to 16 hours per day in a bid to reduce costs, Mr. Ang added.
He said PAL also hoped to close a deal for a five-year re-fleeting program.
"What we want to do is to close the deal as soon as possible for the 100 units we will order. Most of the new airplanes will replace the old airplanes, while others will be reserved for expansion," Mr. Ang said.
He said two Boeing 777-300ERs and eight Airbus 320s were expected to join the PAL fleet this year, having been previously purchased by the previous management.
Moving forward, Mr. Ang said he was confident that the public would again view the company with favor despite recent labor issues.
"PAL is a very good company and a very good brand. Despite all that it has been through, it seems many people still want to ride PAL again," he claimed.
San Miguel shares lost 0.44% to P113.50 yesterday from P114.00 on Wednesday. -- Franz Jonathan G. de la Fuente and Cliff Harvey C. Venzon
Ang: PAL profitable after 1 year
Manila Standard Today
May 11, 2012
by Jenniffer B. Austria
Conglomerate San Miguel Corp. is confident Philippine Airlines will return to profitability one year after acquiring a 49-percent interest and taking over management control over the country’s national flag carrier.
San Miguel president and chief operating officer Ramon Ang said in an interview at the sidelines of the annual stockholders’ meeting of Ginebra San Miguel Inc. that the airline planned to reduce cost by increasing the utilization of aircraft from 10 hours to 16 hours a day and improving the system for selling tickets to get better yield and pricing.
“PAL will make turnaround a year from the time we invested in the company. We are confident that PAL will make a turnaround,” Ang said.
He said PAL would also fly non-stop to New York within the next three months, Toronto within the year and Europe within a one-year period.
Ang said the airline would utilize two Boeing 777-300 ERs to be delivered this year for the flight to New York and Toronto. Two more Boeing 777-300 ERs are scheduled for delivery by 2013.
PAL is launching the non-stop flights amid the decision of US authorities to strip the Philippines of its Category 1 status. Ang expressed hope that the country’s problems with US and EU aviation authorities would be resolved soon to enable the carrier to fly European destinations like London, Paris, Frankfurt and Rome.
May 11, 2012
by Jenniffer B. Austria
Conglomerate San Miguel Corp. is confident Philippine Airlines will return to profitability one year after acquiring a 49-percent interest and taking over management control over the country’s national flag carrier.
San Miguel president and chief operating officer Ramon Ang said in an interview at the sidelines of the annual stockholders’ meeting of Ginebra San Miguel Inc. that the airline planned to reduce cost by increasing the utilization of aircraft from 10 hours to 16 hours a day and improving the system for selling tickets to get better yield and pricing.
“PAL will make turnaround a year from the time we invested in the company. We are confident that PAL will make a turnaround,” Ang said.
He said PAL would also fly non-stop to New York within the next three months, Toronto within the year and Europe within a one-year period.
Ang said the airline would utilize two Boeing 777-300 ERs to be delivered this year for the flight to New York and Toronto. Two more Boeing 777-300 ERs are scheduled for delivery by 2013.
PAL is launching the non-stop flights amid the decision of US authorities to strip the Philippines of its Category 1 status. Ang expressed hope that the country’s problems with US and EU aviation authorities would be resolved soon to enable the carrier to fly European destinations like London, Paris, Frankfurt and Rome.
Monday, May 7, 2012
Tan to keep remaning PAL stake
The Philippine Star
May 7, 2012
By Zinnia B. Dela Peña
May 7, 2012
By Zinnia B. Dela Peña
MANILA, Philippines - The family of taipan Lucio Tan, who ceded management control of Philippine Airlines to diversifying conglomerate San Miguel Corp., plans to keep its remaining stake in Asia’s oldest carrier.
“No, we’re not selling” was the reply of Michael Tan, son of the country’s second wealthiest man, when asked whether his family would eventually sell what’s left of its stake in PAL.
The Tans now hold a 51-percent indirect stake in PAL and budget sister carrier Air Philippines after unloading 49 percent to San Miguel, the nation’s largest company by revenue, for about $500 million. The new investment, however, will be used to strengthen the operations of PAL, which has been saddled with skyrocketing fuel costs, labor problems, and fierce competition from low-cost rivals.
To stay afloat, PAL needs to upgrade its ageing fleet and add new routes.
Tan’s family has taken over PAL in 1992 when it was privatized by the government.
In 1995, Tan’s group embarked on an ambitious $4-billion modernization and re-fleeting program aimed at making PAL one of Asia’s best airlines within three years.
The 1997 Asian financial crisis, however, has crippled PAL’s financial status, forcing the airline to downsize its international operations by ceasing operations to Europe and the Middle East, reducing the size of its fleet and laying off employees.
Tan, who had a networth of $2.8 billion according to Forbes, was earlier rumored to sell all of his businesses except his liquor firm Asia Brewery Inc., the second largest brewer in the country and realty firm Eton Properties.
He also owns cigarette-maker Fortune Tobacco Corp., the country’s largest tobacco company, Philippine National Bank and Tanduay Holdings.
In addition to this, Tan owns Century Park Hotel, University of the East, Foremost Farms, and Lucky Travel Corp.
“No, we’re not selling” was the reply of Michael Tan, son of the country’s second wealthiest man, when asked whether his family would eventually sell what’s left of its stake in PAL.
The Tans now hold a 51-percent indirect stake in PAL and budget sister carrier Air Philippines after unloading 49 percent to San Miguel, the nation’s largest company by revenue, for about $500 million. The new investment, however, will be used to strengthen the operations of PAL, which has been saddled with skyrocketing fuel costs, labor problems, and fierce competition from low-cost rivals.
To stay afloat, PAL needs to upgrade its ageing fleet and add new routes.
Tan’s family has taken over PAL in 1992 when it was privatized by the government.
In 1995, Tan’s group embarked on an ambitious $4-billion modernization and re-fleeting program aimed at making PAL one of Asia’s best airlines within three years.
The 1997 Asian financial crisis, however, has crippled PAL’s financial status, forcing the airline to downsize its international operations by ceasing operations to Europe and the Middle East, reducing the size of its fleet and laying off employees.
Tan, who had a networth of $2.8 billion according to Forbes, was earlier rumored to sell all of his businesses except his liquor firm Asia Brewery Inc., the second largest brewer in the country and realty firm Eton Properties.
He also owns cigarette-maker Fortune Tobacco Corp., the country’s largest tobacco company, Philippine National Bank and Tanduay Holdings.
In addition to this, Tan owns Century Park Hotel, University of the East, Foremost Farms, and Lucky Travel Corp.
Wednesday, April 18, 2012
PAL, PAL Holdings boards quit
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.
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.
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.
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)
Saturday, February 25, 2012
PAL mgm't not involved in sale talks
By Mary Ann Ll. Reyes
(The Philippine Star)
Updated February 25, 2012 12:00 AM
MANILA, Philippines - Flag carrier Philippine Airlines (PAL) said yesterday that the airline management is not involved, directly or indirectly, in any talks for the sale of PAL shares to third parties like San Miguel Corp. (SMC).
In a statement, PAL president Jaime Bautista maintained that PAL or any of its officers are not privy to the reported talks between its principal shareholders and the SMC Group.
“There has been a lot of chatter about ongoing negotiations for the sale of PAL shares. But I want to make it clear that any talks or negotiations are just between our principal shareholders and the SMC Group. PAL management is definitely not part of it,” said Bautista.
He said PAL spokesperson Cielo Villaluna was misquoted in published reports confirming talks between PAL and SMC. “Ms. Villaluna said talks are definitely ongoing, but didn’t say it was between PAL and SMC. She must have been referring to published reports about ongoing negotiations between shareholders of the two companies,” Bautista said.
He stressed that PAL is separate and distinct from its individual shareholders.
Tan earlier confirmed there are negotiations with SMC president Ramon Ang for possible investments in the ailing flag carrier.
It has been reported that SMC may end up acquiring over 40 percent of PAL, with Tan’s group still retaining control.
Earlier, SMC said that it was invited by Tan to participate and assist in the refleeting and modernization of PAL’s aircraft in preparation for the projected heavy influx of tourists in the coming years.
(The Philippine Star)
Updated February 25, 2012 12:00 AM
MANILA, Philippines - Flag carrier Philippine Airlines (PAL) said yesterday that the airline management is not involved, directly or indirectly, in any talks for the sale of PAL shares to third parties like San Miguel Corp. (SMC).
In a statement, PAL president Jaime Bautista maintained that PAL or any of its officers are not privy to the reported talks between its principal shareholders and the SMC Group.
“There has been a lot of chatter about ongoing negotiations for the sale of PAL shares. But I want to make it clear that any talks or negotiations are just between our principal shareholders and the SMC Group. PAL management is definitely not part of it,” said Bautista.
He said PAL spokesperson Cielo Villaluna was misquoted in published reports confirming talks between PAL and SMC. “Ms. Villaluna said talks are definitely ongoing, but didn’t say it was between PAL and SMC. She must have been referring to published reports about ongoing negotiations between shareholders of the two companies,” Bautista said.
He stressed that PAL is separate and distinct from its individual shareholders.
Tan earlier confirmed there are negotiations with SMC president Ramon Ang for possible investments in the ailing flag carrier.
It has been reported that SMC may end up acquiring over 40 percent of PAL, with Tan’s group still retaining control.
Earlier, SMC said that it was invited by Tan to participate and assist in the refleeting and modernization of PAL’s aircraft in preparation for the projected heavy influx of tourists in the coming years.
SMC acquisition of PAL ‘imminent’
By: Daxim L. Lucas, Paolo Montecillo
Philippine Daily Inquirer
February 24th, 2012
San Miguel Corp.’s (SMC) acquisition of a “significant minority stake” in flag carrier Philippine Airlines (PAL) is, for all intents and purposes, a done deal with an official announcement set to be made in the coming days.
Sources from both camps familiar with the negotiations between tycoon Ramon Ang and the country’s second richest man, Lucio Tan, described the deal as “imminent,” adding that only “minor details and final touches” remained to be ironed out between both businessmen.
The SMC conglomerate is set to acquire a 49-percent stake in PAL for an estimated $500 million, which will come in the form of an equity infusion, resulting in a dilution of Tan’s stake. SMC will also be given management control of the airline.
The deal is being likened to Tan’s divestment of half his stake in Fortune Tobacco Corp. to form a joint venture with multinational cigarette maker Philip Morris International in 2010.
In that transaction, management control of the merged entity was also handed over to the acquiring party.
PAL—the first airline to offer commercial services in Asia—has also seen its market share eroded in recent years by the entry of no-frills carriers like Cebu Pacific of the Gokongwei family.
According to sources, an initial agreement between San Miguel president Ang and Tan was sealed as early as late last year and would have been concluded last month were it not for a last-minute expression of interest by telecommunications tycoon Manuel Pangilinan.
Pangilinan—who also runs Hong Kong-based First Pacific Group of Indonesia’s Salim family—was said to have offered Tan $700 million for a 100-percent stake in the airline.
The offer was said to have divided Tan’s close advisers with the taipan having decided to favor Ang with the deal only in recent days.
Officials from both camps declined to speak on the record about the transaction.
Ang said: “We are still in talks with them.”
Yesterday, PAL spokesperson Cielo Villaluna confirmed months of speculation surrounding the nation’s oldest carrier.
“Talks are definitely going on,” Villaluna told the Inquirer.
She clarified, however, that discussions were at the shareholder level and that the company as an entity was not directly involved.
She declined to give details, saying that the company would issue public disclosures at the appropriate time, or once any deal is signed.
Villaluna added that she was not aware if PAL’s shareholders were in talks with other groups aside from SMC.
Earlier this month, PAL’s parent company PAL Holdings reported a net loss of P3.6 billion for the April-to-December period of 2011—the first three quarters of the airline’s current fiscal year. This was a reversal from more than P3 billion in profits a year before.
The losses were caused by high fuel prices and labor issues in late 2011 that prevented PAL from cashing in on the holiday season last December.
PAL said total expenses rose 12 percent, driven mainly by the higher cost of jet fuel, which averaged $133 a barrel in 2011 from $98 in 2010.
At the end of 2011, PAL said jet fuel accounted for more than 50 percent of total expenses, up from 39 percent a year earlier.
Philippine Daily Inquirer
February 24th, 2012
San Miguel Corp.’s (SMC) acquisition of a “significant minority stake” in flag carrier Philippine Airlines (PAL) is, for all intents and purposes, a done deal with an official announcement set to be made in the coming days.
Sources from both camps familiar with the negotiations between tycoon Ramon Ang and the country’s second richest man, Lucio Tan, described the deal as “imminent,” adding that only “minor details and final touches” remained to be ironed out between both businessmen.
The SMC conglomerate is set to acquire a 49-percent stake in PAL for an estimated $500 million, which will come in the form of an equity infusion, resulting in a dilution of Tan’s stake. SMC will also be given management control of the airline.
The deal is being likened to Tan’s divestment of half his stake in Fortune Tobacco Corp. to form a joint venture with multinational cigarette maker Philip Morris International in 2010.
In that transaction, management control of the merged entity was also handed over to the acquiring party.
PAL—the first airline to offer commercial services in Asia—has also seen its market share eroded in recent years by the entry of no-frills carriers like Cebu Pacific of the Gokongwei family.
According to sources, an initial agreement between San Miguel president Ang and Tan was sealed as early as late last year and would have been concluded last month were it not for a last-minute expression of interest by telecommunications tycoon Manuel Pangilinan.
Pangilinan—who also runs Hong Kong-based First Pacific Group of Indonesia’s Salim family—was said to have offered Tan $700 million for a 100-percent stake in the airline.
The offer was said to have divided Tan’s close advisers with the taipan having decided to favor Ang with the deal only in recent days.
Officials from both camps declined to speak on the record about the transaction.
Ang said: “We are still in talks with them.”
Yesterday, PAL spokesperson Cielo Villaluna confirmed months of speculation surrounding the nation’s oldest carrier.
“Talks are definitely going on,” Villaluna told the Inquirer.
She clarified, however, that discussions were at the shareholder level and that the company as an entity was not directly involved.
She declined to give details, saying that the company would issue public disclosures at the appropriate time, or once any deal is signed.
Villaluna added that she was not aware if PAL’s shareholders were in talks with other groups aside from SMC.
Earlier this month, PAL’s parent company PAL Holdings reported a net loss of P3.6 billion for the April-to-December period of 2011—the first three quarters of the airline’s current fiscal year. This was a reversal from more than P3 billion in profits a year before.
The losses were caused by high fuel prices and labor issues in late 2011 that prevented PAL from cashing in on the holiday season last December.
PAL said total expenses rose 12 percent, driven mainly by the higher cost of jet fuel, which averaged $133 a barrel in 2011 from $98 in 2010.
At the end of 2011, PAL said jet fuel accounted for more than 50 percent of total expenses, up from 39 percent a year earlier.
PAL confirms Talks With SMC
Planned Acquisition Of 49% Stake
By CLARISSA BATINO (BLOOMBERG)
February 25, 2012, 3:22am
MANILA, Philippines — San Miguel Corp., the Philippines’ largest company, is in talks to buy 49 percent of Philippine Airlines Inc. and take management control of the carrier, according to three people familiar with the discussions, Philippine Airlines confirmed.
''Talks are definitely ongoing,'' airline spokeswoman Cielo Villaluna told AFP when asked to confirm media reports that negotiations were under way.
''As to the acquisition of shares and details of the negotiations, we are bound by non-disclosure until (the) fine print of the deal is reached.''
The airline, controlled by billionaire Lucio Tan, expects to get about $500 million for the stake, said one of the people, who declined to be identified as the discussions are private. Tan’s holdings will drop to about 51 percent as the carrier will issue new shares, the people said.
A purchase would help San Miguel President Ramon Ang reach his goal of doubling sales by 2016 as he diversifies away from food and brewing. Unprofitable PAL cut 2,400 jobs in 2011 after losing market share to budget carrier Cebu Air Inc.
Ang declined to comment about a possible deal in a mobile phone message yesterday. Joey de Guzman, a Philippine Air spokesman, declined to comment. Tan controls the carrier through companies including Manila-listed PAL Holdings Inc.
“The airline business has the potential for growth in a country that’s now focused on boosting its infrastructure and tourism,” said Jonathan Ravelas, market strategist at Manila-based BDO Unibank Inc. “San Miguel is betting on the view that once the nation’s infrastructure improves, tourism will boom and you start bringing in bigger planes, increase air traffic and even turn PAL into a regional player.”
San Miguel, parent of the brewer that controls more than 90 percent of the Philippines’ beer market, said last year it plans to invest more than $4 billion expanding in industries including energy, telecommunications and transportation. In August, the Manila-based company agreed to buy three Malaysian units from Exxon Mobil Corp. for $610 million.
Philippine Airlines, Asia’s oldest carrier, posted a $33.5-million loss in the October-December period. Cebu Air, which flies as Cebu Pacific, has lured customers with a younger fleet and a low-cost, no-frills service. A carrier backed by AirAsia Bhd., the region’s biggest budget airline, may begin flying in the country as early as next month.
PAL Holdings, which owns 82 percent of Philippine Airlines, has jumped 49 percent in Manila trading in the past year. Tan controls 98 percent of the parent company.
Tan, the second-richest man in the Philippines behind Henry Sy, has a family fortune of $2.3 billion, according to Forbes. His other companies include cigarette-maker Fortune Tobacco Corp. and Asia Brewery Inc., the country’s second-biggest brewer.
''Talks are definitely ongoing,'' airline spokeswoman Cielo Villaluna told AFP when asked to confirm media reports that negotiations were under way.
''As to the acquisition of shares and details of the negotiations, we are bound by non-disclosure until (the) fine print of the deal is reached.''
The airline, controlled by billionaire Lucio Tan, expects to get about $500 million for the stake, said one of the people, who declined to be identified as the discussions are private. Tan’s holdings will drop to about 51 percent as the carrier will issue new shares, the people said.
A purchase would help San Miguel President Ramon Ang reach his goal of doubling sales by 2016 as he diversifies away from food and brewing. Unprofitable PAL cut 2,400 jobs in 2011 after losing market share to budget carrier Cebu Air Inc.
Ang declined to comment about a possible deal in a mobile phone message yesterday. Joey de Guzman, a Philippine Air spokesman, declined to comment. Tan controls the carrier through companies including Manila-listed PAL Holdings Inc.
“The airline business has the potential for growth in a country that’s now focused on boosting its infrastructure and tourism,” said Jonathan Ravelas, market strategist at Manila-based BDO Unibank Inc. “San Miguel is betting on the view that once the nation’s infrastructure improves, tourism will boom and you start bringing in bigger planes, increase air traffic and even turn PAL into a regional player.”
San Miguel, parent of the brewer that controls more than 90 percent of the Philippines’ beer market, said last year it plans to invest more than $4 billion expanding in industries including energy, telecommunications and transportation. In August, the Manila-based company agreed to buy three Malaysian units from Exxon Mobil Corp. for $610 million.
Philippine Airlines, Asia’s oldest carrier, posted a $33.5-million loss in the October-December period. Cebu Air, which flies as Cebu Pacific, has lured customers with a younger fleet and a low-cost, no-frills service. A carrier backed by AirAsia Bhd., the region’s biggest budget airline, may begin flying in the country as early as next month.
PAL Holdings, which owns 82 percent of Philippine Airlines, has jumped 49 percent in Manila trading in the past year. Tan controls 98 percent of the parent company.
Tan, the second-richest man in the Philippines behind Henry Sy, has a family fortune of $2.3 billion, according to Forbes. His other companies include cigarette-maker Fortune Tobacco Corp. and Asia Brewery Inc., the country’s second-biggest brewer.
Tuesday, February 21, 2012
PAL registered P3.6-b loss in 3 quarters
Manila Standard Today
February 21, 2012
by Jenniffer B. Austria
Philippine Airlines Holdings Inc., the parent company of flag carrier Philippine Airlines, posted a P3.6-billion net loss in the first three quarters of its fiscal year ending December, a reversal from P3.2-billion net profit posted in the same period last year due to lower income from operations.
PAL’s full fiscal year begins in April and ends in March of the following year.
PAL Holdings, in a financial report filed with the Philippine Stock Exchange, said revenues reached P54.38 billion in nine months to December, down 2 percent from P55.22 billion in the same period a year ago.
“Decline in revenues can be attributable mainly to decrease in passenger and cargo revenues by 13 percent, offset by the increase in other income earned during the period,” PAL Holdings said.
“The drop in passenger revenues by 1 percent was brought about mainly by the effect of the peso-dollar exchange rate fluctuations,” it added.
Other revenues, which were up by 9 percent, included lease income from aircraft operating lease arrangements with an entity under common control, excess baggage revenues and ancillary revenues generated mainly from other passenger transport services.
Total expenses jumped to P57.97 billion from P51.67 billion, owing to higher expenses related to flight operations, aircraft and traffic servicing, reservation and sales and other expenses.
February 21, 2012
by Jenniffer B. Austria
Philippine Airlines Holdings Inc., the parent company of flag carrier Philippine Airlines, posted a P3.6-billion net loss in the first three quarters of its fiscal year ending December, a reversal from P3.2-billion net profit posted in the same period last year due to lower income from operations.
PAL’s full fiscal year begins in April and ends in March of the following year.
PAL Holdings, in a financial report filed with the Philippine Stock Exchange, said revenues reached P54.38 billion in nine months to December, down 2 percent from P55.22 billion in the same period a year ago.
“Decline in revenues can be attributable mainly to decrease in passenger and cargo revenues by 13 percent, offset by the increase in other income earned during the period,” PAL Holdings said.
“The drop in passenger revenues by 1 percent was brought about mainly by the effect of the peso-dollar exchange rate fluctuations,” it added.
Other revenues, which were up by 9 percent, included lease income from aircraft operating lease arrangements with an entity under common control, excess baggage revenues and ancillary revenues generated mainly from other passenger transport services.
Total expenses jumped to P57.97 billion from P51.67 billion, owing to higher expenses related to flight operations, aircraft and traffic servicing, reservation and sales and other expenses.
Monday, February 20, 2012
PAL plans to start flights to Bali in March
Business Mirror
February 20, 2012
By LENIE LECTURA
FLAG carrier Airlines (PAL) expects to start servicing direct flights to Bali, Indonesia, its first new destination for the year.
PAL President Jaime Bautista, in an interview last week, said the flag carrier has already applied for a permit to operate the new route.
Aviation officials from Indonesia, however, have yet to approve this. “In fact, there was already a technical inspection here conducted by them. Once it is issued, we will work on our marketing plan. We are looking at March to hopefully fly there,” he said.
If allowed, Bali will be PAL’s second route in Indonesia. The flag carrier already mounts direct flights to the Indonesian capital, Jakarta.
PAL will deploy an Airbus A320, which can transport over 150 passengers, to service the direct flights to Bali, said Cesar Chiong, Executive Assistant to the President. Initially, the flag carrier is looking at mounting thrice-weekly flights.
“Preferably, we may service the Bali route at night because this is the time when some of our A320s are not being utilized,” added Chiong.
Asked how big the Manila-Bali operation can contribute to the airline’s revenue, Bautista said, “It’s not considered yet a huge market but it is a developing market.”
Aside from Bali, PAL is looking at adding a new destination in China. Bautista said PAL may fly to Jinjiang this year. Jinjiang is a city in China’s Fujian province.
The PAL official said the Chinese government is looking at converting a military airport in Jinjiang into a commercial airport. “Chinese airlines already signified that they want to fly there and we would want also to fly there. There is an ongoing technical review now.”
PAL reported on Friday that it suffered a net loss in the third quarter of its fiscal year ending December 2011 mainly on account of skyrocketing jet fuel price and disruption in service brought about by the strike staged by its ground workers.
The flag carrier’s net loss stood at $33.5 million from October to December last year from a net income of $15.1 million in the same period over a year ago.
Revenues dipped by 3.8 percent to $386 million compared with $397 million reported from October to December of the previous year.
The slow takeup in passenger traffic as well as declining cargo markets are seen to have caused the weak revenues during the period.
“While there were improvements in yields for both passenger and cargo compared with the same period last year, load factors lagged behind,“ the airline said in a statement. No other details were provided.
Bautista earlier said a personnel strike also undermined the airline’s third-quarter revenues and profit performance during the quarter. “There was a time that our domestic was down 20 flights per day, but now we are back to normal” Bautista said. The airline normally stages 140 flights a day.
Now, PAL is now back to normal operations, with average flights of 130 to 140 a day, following the spinoff and outsourcing program last year.
Between September to November 2011, the airline’s load factor for domestic operation was a low 70 percent, while international operation was at mid-70 percent. “That’s why we protected the international market,” Bautista said, adding that international operations contribute about 70 percent of its passenger revenue and domestic operation, 30 percent.
PAL’s operating expenses reached $419.5 million, up by $34.8 million or 9 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 October to December 2011 from an average of $100.96 per barrel in the same period the previous year.
Fuel accounts for about 50 to 60 percent of an airline’s operating cost per passenger, and is the second-highest expense next to labor.
February 20, 2012
By LENIE LECTURA
FLAG carrier Airlines (PAL) expects to start servicing direct flights to Bali, Indonesia, its first new destination for the year.
PAL President Jaime Bautista, in an interview last week, said the flag carrier has already applied for a permit to operate the new route.
Aviation officials from Indonesia, however, have yet to approve this. “In fact, there was already a technical inspection here conducted by them. Once it is issued, we will work on our marketing plan. We are looking at March to hopefully fly there,” he said.
If allowed, Bali will be PAL’s second route in Indonesia. The flag carrier already mounts direct flights to the Indonesian capital, Jakarta.
PAL will deploy an Airbus A320, which can transport over 150 passengers, to service the direct flights to Bali, said Cesar Chiong, Executive Assistant to the President. Initially, the flag carrier is looking at mounting thrice-weekly flights.
“Preferably, we may service the Bali route at night because this is the time when some of our A320s are not being utilized,” added Chiong.
Asked how big the Manila-Bali operation can contribute to the airline’s revenue, Bautista said, “It’s not considered yet a huge market but it is a developing market.”
Aside from Bali, PAL is looking at adding a new destination in China. Bautista said PAL may fly to Jinjiang this year. Jinjiang is a city in China’s Fujian province.
The PAL official said the Chinese government is looking at converting a military airport in Jinjiang into a commercial airport. “Chinese airlines already signified that they want to fly there and we would want also to fly there. There is an ongoing technical review now.”
PAL reported on Friday that it suffered a net loss in the third quarter of its fiscal year ending December 2011 mainly on account of skyrocketing jet fuel price and disruption in service brought about by the strike staged by its ground workers.
The flag carrier’s net loss stood at $33.5 million from October to December last year from a net income of $15.1 million in the same period over a year ago.
Revenues dipped by 3.8 percent to $386 million compared with $397 million reported from October to December of the previous year.
The slow takeup in passenger traffic as well as declining cargo markets are seen to have caused the weak revenues during the period.
“While there were improvements in yields for both passenger and cargo compared with the same period last year, load factors lagged behind,“ the airline said in a statement. No other details were provided.
Bautista earlier said a personnel strike also undermined the airline’s third-quarter revenues and profit performance during the quarter. “There was a time that our domestic was down 20 flights per day, but now we are back to normal” Bautista said. The airline normally stages 140 flights a day.
Now, PAL is now back to normal operations, with average flights of 130 to 140 a day, following the spinoff and outsourcing program last year.
Between September to November 2011, the airline’s load factor for domestic operation was a low 70 percent, while international operation was at mid-70 percent. “That’s why we protected the international market,” Bautista said, adding that international operations contribute about 70 percent of its passenger revenue and domestic operation, 30 percent.
PAL’s operating expenses reached $419.5 million, up by $34.8 million or 9 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 October to December 2011 from an average of $100.96 per barrel in the same period the previous year.
Fuel accounts for about 50 to 60 percent of an airline’s operating cost per passenger, and is the second-highest expense next to labor.
Saturday, November 19, 2011
PAL losses widen to $39.4M in July-Sept
By Mary Ann LL. Reyes
(The Philippine Star)
Updated November 19, 2011 12:00 AM
MANILA, Philippines - Philippine Airlines (PAL) posted total comprehensive losses of $39.4 million in the second quarter of its fiscal year (July to September 2011) due mainly to skyrocketing jet fuel prices.
In a filing with the Securities and Exchange Commission (SEC), PAL said its second quarter losses was from the total comprehensive income of $26.7 million recognized in the same period in 2010.
The airline said total revenues reached $420.4 million, reflecting a 4.7 percent improvement over the year-ago figure of $401.6 million for the same three-month period.
However, total expenses went up by $84.8 million or 22.6 percent to $459.7 million for the second quarter of 2011. Jet fuel, which remains the airline’s biggest expense, contributed the largest increase at $48.3 million or 33.9 percent from $142.5 million in 2010 to $190.8 million for the current three-month period. Average jet fuel prices rose from $94.92 per barrel to $131.99 per barrel.
PAL reported that based on data released by the International Air Transport Association (IATA), the airline industry in general achieved growth in passenger traffic year-on-year as of September 2011 by an average of 6.3 percent. However, operating results in recent months are showing a decline in both passenger and cargo traffic, reflecting a reluctance for both business and leisure travel spawned by problems in the US and European economies.
Going forward, IATA reports indicate more difficult times ahead for the airline industry as various countries continue to be plagued with economic uncertainty and costs are rising with not much room to increase yields.
Friday, November 4, 2011
ECOP joins call for gov't action vs striking PAL workers
The Philippine Star
November 4, 2011
MANILA, Philippines - The Employers Confederation of the Philippines (ECOP) has joined the snowballing call for government action against violent abuses of outsourced employees of Philippine Airlines (PAL).
“It will be difficult for ECOP and all employers to ignore the continuing travesty of justice being committed by former PAL employees against PAL,” said ECOP president Edgardo Lacson in a statement.
While ECOP’s member-associations and employers recognize the rights of labor to air their grievances, “this right is not absolute and must be staged within the bounds prescribed by (the Labor Department’s) rules,” he said.
Pending resolution of a case filed by PALEA with the Court of Appeals, Lacson said “the union should observe the rule of law by allowing normal operations and not engaging in very disruptive picketing of PAL’s premises.”
Terminated PAL workers on Oct. 29 turned violent and blocked an exiting PAL truck from the PAL Inflight Center building using truncheons, wooden planks spiked with nails and even threatened to torch the truck, resulting in the hospitalization of a PAL security guard who suffocated from the fumes.
ECOP appealed for the lifting of the “illegal barricade immediately” for the sake of the “health, safety and well-being of the protesters.”
Earlier, the Federation of Philippine Industries (FPI), Federation of Filipino-Chinese Chambers of Commerce and Industry (FFCCCI) and Philippine Chamber of Commerce and Industry (PCCI) issued separate statements urging for swift and decisive government action in resolving the standoff between PAL and the separated workers.
The business groups said increasing number of incidents of harassment inflicted on PAL employees and equipment is “not conducive to business and could discourage investors.”
The FPI, FFCCCI and PCCI urged government to protect the rights of business in the same way that workers’ rights are protected by existing laws.
Last week, PAL called on the country’s business groups to collectively appeal for better protection of business against dismissed workers who prevent the free pursuit of their trade.
November 4, 2011
MANILA, Philippines - The Employers Confederation of the Philippines (ECOP) has joined the snowballing call for government action against violent abuses of outsourced employees of Philippine Airlines (PAL).
“It will be difficult for ECOP and all employers to ignore the continuing travesty of justice being committed by former PAL employees against PAL,” said ECOP president Edgardo Lacson in a statement.
While ECOP’s member-associations and employers recognize the rights of labor to air their grievances, “this right is not absolute and must be staged within the bounds prescribed by (the Labor Department’s) rules,” he said.
Pending resolution of a case filed by PALEA with the Court of Appeals, Lacson said “the union should observe the rule of law by allowing normal operations and not engaging in very disruptive picketing of PAL’s premises.”
Terminated PAL workers on Oct. 29 turned violent and blocked an exiting PAL truck from the PAL Inflight Center building using truncheons, wooden planks spiked with nails and even threatened to torch the truck, resulting in the hospitalization of a PAL security guard who suffocated from the fumes.
ECOP appealed for the lifting of the “illegal barricade immediately” for the sake of the “health, safety and well-being of the protesters.”
Earlier, the Federation of Philippine Industries (FPI), Federation of Filipino-Chinese Chambers of Commerce and Industry (FFCCCI) and Philippine Chamber of Commerce and Industry (PCCI) issued separate statements urging for swift and decisive government action in resolving the standoff between PAL and the separated workers.
The business groups said increasing number of incidents of harassment inflicted on PAL employees and equipment is “not conducive to business and could discourage investors.”
The FPI, FFCCCI and PCCI urged government to protect the rights of business in the same way that workers’ rights are protected by existing laws.
Last week, PAL called on the country’s business groups to collectively appeal for better protection of business against dismissed workers who prevent the free pursuit of their trade.
Thursday, November 3, 2011
Big business groups rally behind PAL
The Philippine Star
November 3, 2011
MANILA, Philippines - Some of the country’s biggest business groups yesterday expressed solidarity with Philippine Airlines (PAL) as they joined calls for swifter and more decisive government action to resolve the standoff between the embattled flag carrier and its separated workers.
Federation of Philippine Industries Inc. (FPI) chairman Jesus Arranza said the current problems plaguing PAL, particularly the recent blocking of one of its trucks by dismissed workers, “is not conducive to business,” as this could discourage investors.
He urged government, particularly the Department of Labor and Employment (DOLE) to ensure that the rights of businesses are protected in the same way as it accords protection to workers.
“We’re only asking for fair play. Government shouldn’t allow ‘tyranny of the minority’ which is currently happening at PAL. As Mayor Lim once said, ‘the law should be applied to all, or not at all,” he stressed.
For his part, PCCI president Francis Chua said his group wants an immediate resolution of the dispute between PAL and its former workers, citing that industrial peace is key to success in any business.
“PCCI is definitely supporting business and industry, but we must also look at the interest of the labor sector. Labor is an indispensable element in wealth formation,” he said.
Meanwhile, the FFCCCI appealed to law enforcement agencies to exert all efforts to prevent potential clashes between PAL and its former employees as the conflict is triggering anxiety among local and foreign investors.
“We’re requesting authorities to take a more direct hand in resolving the impasse before things get out of control. The recent turn of events where former PAL workers resorted to harassment and intimidation tactics at their picket line, impeded the airline’s operations,” said FFCCCI president Tan Ching.
The group said businesses recognize workers’ right to air their grievances, but said it hopes employees are also aware that employers have rights, too. The FFCCCI said it wishes the problem would be resolved soon like what the Australian government had done in the case of its flag carrier Qantas Airlines.
“A quick resolution of the dispute at PAL would certainly be more conducive to the country’s business climate,” he added.
Earlier, PAL called on business groups to collectively appeal for better protection of businesses which are prevented from freely pursuing their trade.
PAL said it is in the best interest of all private businesses, big or small, to protect themselves against harassment like illegal blockades by former workers who have been validly and legally dismissed.
November 3, 2011
MANILA, Philippines - Some of the country’s biggest business groups yesterday expressed solidarity with Philippine Airlines (PAL) as they joined calls for swifter and more decisive government action to resolve the standoff between the embattled flag carrier and its separated workers.
Federation of Philippine Industries Inc. (FPI) chairman Jesus Arranza said the current problems plaguing PAL, particularly the recent blocking of one of its trucks by dismissed workers, “is not conducive to business,” as this could discourage investors.
He urged government, particularly the Department of Labor and Employment (DOLE) to ensure that the rights of businesses are protected in the same way as it accords protection to workers.
“We’re only asking for fair play. Government shouldn’t allow ‘tyranny of the minority’ which is currently happening at PAL. As Mayor Lim once said, ‘the law should be applied to all, or not at all,” he stressed.
For his part, PCCI president Francis Chua said his group wants an immediate resolution of the dispute between PAL and its former workers, citing that industrial peace is key to success in any business.
“PCCI is definitely supporting business and industry, but we must also look at the interest of the labor sector. Labor is an indispensable element in wealth formation,” he said.
Meanwhile, the FFCCCI appealed to law enforcement agencies to exert all efforts to prevent potential clashes between PAL and its former employees as the conflict is triggering anxiety among local and foreign investors.
“We’re requesting authorities to take a more direct hand in resolving the impasse before things get out of control. The recent turn of events where former PAL workers resorted to harassment and intimidation tactics at their picket line, impeded the airline’s operations,” said FFCCCI president Tan Ching.
The group said businesses recognize workers’ right to air their grievances, but said it hopes employees are also aware that employers have rights, too. The FFCCCI said it wishes the problem would be resolved soon like what the Australian government had done in the case of its flag carrier Qantas Airlines.
“A quick resolution of the dispute at PAL would certainly be more conducive to the country’s business climate,” he added.
Earlier, PAL called on business groups to collectively appeal for better protection of businesses which are prevented from freely pursuing their trade.
PAL said it is in the best interest of all private businesses, big or small, to protect themselves against harassment like illegal blockades by former workers who have been validly and legally dismissed.
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