MVP, Ayala groups not interested in PAL

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The groups say they are not interested in the flag carrier, whose major shareholders are in sale talks

BUYBACK. The LT Group is reportedly raising close to $1 billion to buy back the 51% of SMC and to pay the advances made by the diversified conglomerate to PAL for the purchase of brand new aircraft. File photo by Agence France-Presse / Jay Directo

MANILA, Philippines – The group of businessman Manuel V. Pangilinan and Ayala Corporation said they are not interested in Philippine Airlines (PAL) amid reports its major shareholders are in sale talks.

Pangilinan, who chairs dominant carrier Philippine Long Distance Telephone Company (PLDT) and infrastructure giant Metro Pacific Investments Corporation (MPIC), said they have abandoned plans to invest in the airline industry.

“This time, investment in airline is not in the radar scene,” he told reporters on the sidelines of a briefing on the first-half earnings of PLDT Tuesday, August 5.

The Pangilinan group offered to acquire a stake in PAL two years ago. PAL chairman Lucio Tan eventually took in diversified conglomerate San Miguel Corporation as partner.

“It’s maybe not within our line of business. I don’t think were good in running an airline,” Pangilinan said.

On the other hand, Ayala managing director John Eric Francia said the conglomerate is not interested in venturing into the airline industry.

“Everything about it is very challenging,” he said.

Tan’s group to regain full control of PAL

In April 2012, San Miguel’s wholly-owned subsidiary San Miguel Equity Investments Inc. acquired a 49% equity interest in Trustmark Holdings Corporation for $500 million. Trustmark owns 97.71% of PAL Holdings Inc., which in turn owns 84.67% of PAL through PR Holdings Inc.

The LT Group expects to take back full control of PAL as early as this month by buying back the stake San Miguel bought.

The group is reportedly raising close to $1 billion to acquire San Miguel’s stake and pay the advances made by the diversified conglomerate for the purchase of brand new aircraft.

San Miguel president and chief operating officer Ramon Ang confirmed that Lucio Tan’s group had already made a formal offer to buy back the conglomerate’s stake in PAL.

However, he clarified that negotiations are still ongoing.

“Yes, still in talks,” Ang said in a text message.

Ang is president and chief operating officer of PAL, while Tan serves as chairman and chief executive officer.

Ang previously said that buyout talks would be concluded within the third quarter of 2014 so as not to derail the improvement in the airline’s financial performance.

Ang vowed to bring PAL back to profitability after posting heavy losses over the past few years.

A Philippine Star report quoted sources as saying that the LT Group wants full control of PAL as the airline is back in the black and is set to expand its flights to the US and Europe following the upgrade of the country’s safety aviation rating back to Category 1 from Category 2 and the lifting of the European ban in July last year.

The report also said that after the acquisition, the LT Group would likely take in Abu Dhabi-based Etihad Airways as partner. In April, the airlines signed an agreement covering codeshare flights, loyalty programs, airport lounges, joint sales and marketing programs to provide better services at their Abu Dhabi and Manila hubs. – Rappler.com

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