San Miguel: No deal to acquire PAL yet

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No handshake has been made and no ink has dried yet on the much-anticipated purchase of the stake of tycoon Lucio Tan in Philippine Airlines (PAL), the country's only legacy carrier

MANILA, Philippines – No handshake has been made and no ink has dried yet on the much-anticipated purchase of the stake of tycoon Lucio Tan in Philippine Airlines (PAL), the country’s only legacy carrier and Asia’s oldest airline.

In a text message to reporters on Tuesday, March 6, San Miguel Corporation president Ramon Ang replied, “Not yet,” when asked if his group has already sealed a deal with Tan.

PAL remains 95% owned by the holding firm controlled by Tan, who has been reported to be looking for buyers for his financially bleeding airline.

In several reports in 2011, San Miguel’s Ang expressed interest in either helping Tan find buyers or for the diversifying conglomerate to acquire Tan’s stake itself.

Also on Tuesday, March 6, San Miguel disclosed to the stock exchange that there is “no definitive agreement” yet when asked to verify a report that PAL affiliate airline, AirPhil Express, would be part of a deal.

“We advise that an appropriate disclosure shall be made in the event a definitive agreement is executed and concluded with respect to the contemplated investment by the Company in Philippine Airlines, Inc. (PAL),” the airline’s corporate secretary Virgilio Jacinto wrote.

PAL and AirPhil Express hold a combined market share of 46% in both domestic and international flights. Closest rival Cebu Pacific’s share currently stands at 44% and the rest of the local players share the remaining 10%.

Meantime, the group of Manuel Pangilinan, another reported interested PAL investor, kept mum on his group’s alleged revised offer.
“I try not to think about it. It’s a tough business,” Pangilinan said on Tuesday, March 6, during the press conference of telecommunication giant PLDT where he is also chair.

“Running an airline business, whether involving a commercial airline or a low-cost carrier, is tough,” he said, basically reiterating what he said in November 2011 when asked about it.

“Well you have to know how to run a budget carrier. It’s not easy. So far, the only successful model in this country is Mr. Gokognwei’s. Cebu Pacific is doing very well. It’s not really easy,” Pangilinan added.
Pangilinan-led PLDT acquired the Gokongwei family’s stake in telecommunication firms Digitel in 2011. After the PLDT-Digitel deal, representatives of the Gokongwei group now sit with Panglinan on the board of PLDT.

Lance Gokongwei, the president and CEO of Cebu Pacific, had said they are not interested in PAL, a legacy airline, since their business model as a budget carrier is working well. –

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