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Gokongwei: We’re not interested in PAL

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The majority owners of budget carrier Cebu Pacific Air are not interested in buying a stake in legacy carrier Philippine Airlines (PAL), which is for sale

MANILA, Philippines – The majority owners of budget carrier Cebu Pacific Air are not interested in buying a stake in Philippine Airlines (PAL), which  the legacy carrier chairman had said is for sale.

“We never looked at it (PAL). We have never been in any discussion,” Cebu Pacific president and CEO Lance Gokongwei replied to reporters who asked him if the group is interested in taking a Asia’s first carrier.

He added that they are confident of Cebu Pacific’s prospects even if PAL will be under new owners. “We’re very focused. No cause for concern,” he said on Tuesday, January 24. 

Tycoon Lucio Tan, who controls PAL, was recently quoted saying PAL is for sale.

PAL has been mired in labor problems after it outsourced 3 non-core operations to reduce cost. The airline is struggling to keep its head above water amid an industry that has become more competitive not only at home but also abroad. 

The Tan group has been in talks with Ramon Ang, the president and CEO of diversifying conglomerate San Miguel Corp. since 2011, but no deal has reportedly been inked yet.

Budget airline model 

Cebu Pacific has overtaken PAL in the lucrative domestic market. It flew almost 12 million in 2011 and targeting 14 million this 2012.

Cebu Pacific was the first in Asia to adapt a budget airline model but had birthing pains implementing the new model as its first recruits–officers from PAL–had a legacy carrier mindset.

A budget carrier has a no-frills operations, keeps its cost levels low, and maximizes the flying hours of its planes by limiting the time it is on the ground. It has no business class nor a first class, and maximizes its cash flow by enticing passengers to buy tickets in advance by dangling low fares. 

AirPhilExpress, a unit of PAL, was supposed to cater to budget airline passengers and compete with Cebu Pacific in the domestic market, but its hybrid model has had mixed results. 

Gokongwei and other officials of Cebu Pacific were in Clark in Pampanga on Tuesday, January 24, for the ground breaking of its pilot training facility, a joint venture with Canada-based CAE. –


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