AirPhil Express part of San Miguel-PAL deal

Rappler.com
The imminent deal between diversifying conglomerate San Miguel Corp. and legacy carrier Philippine Airlines (PAL) will include budget arm AirPhil Express

MANILA, Philippines – The imminent deal between diversifying conglomerate San Miguel Corp. and legacy carrier Philippine Airlines (PAL) will include budget arm AirPhil Express.

“It’s part of the deal,” San Miguel president Ramon Ang told reporters via text message when asked about it.

San Miguel and PAL are expected to announce on Tuesday, April 3, their long-awaited deal, which likely involves the acquisition by San Miguel of a 49% stake in PAL Holdings, the parent firm of the country’s largest and Asia’s oldest airline.

The deal is reportedly worth around $500 million.

Globally, the aviation sector favors the budget airline model since growth has been more brisk among low-cost carriers than among legacy airline, most of whom have been reeling from bankruptcy and labor issues.

Refleeting

As disclosed by San Miguel in December 2011, the deal would likely include the financing of the refleeting and modernization of PAL’s fleet.

AirPhil Express, the hybrid budget arm of PAL, is dependent on PAL for its entire fleet, which is leased.      

PAL has a 5-year reflecting program that involves replacing old aircraft nearing the end of their economic lives with newer ones that are more fuel efficient.

PAL is taking delivery of four Airbus A320s and two Boeing 777s, increasing its current fleet of 36.

The four Airbus aircraft will arrive in March, April, November and December while the Boeing 777 is scheduled in June and November.

Meanwhile, PAL’s sister firm Airphil Express expects the delivery of two Airbus A320 this January 2012, another in February and another in March.

AirPhil has a $290 million capital expenditure budget that will finance its refleeting program as it intends to be a strong second player in the domestic travel sector. – Rappler.com