No fuel discounts for PAL, says Petron chair

Katherine Visconti
With two of his companies losing profits, San Miguel Corp. President Ramon Ang refuses for Petron to discount its fuel for PAL

MANILA, Philippines – What happened to one of the possible synergies between conglomerate San Miguel Corp.’s units?

Oil refiner and retailer Petron Corp. will not extend fuel discounts to sister firm, legacy carrier Philippine Airlines (PAL), according to Ramon Ang, the chairman of Petron and president of San Miguel.

“I don’t think Petron will give discount to PAL,” Ang told reporters after Petron’s first quarter stockholder’s meeting on May 15.

“Whatever price we sell to everybody is the same,” he added.

When San Miguel acquired a 49% stake in PAL last April, the legacy carrier’s “fuel” synergy with Petron was eyed positively in this landmark corporate deal.

Jet fuel is the biggest cost component of airlines, accounting for roughly 30% to 40% of total operating costs. (Labor is the second biggest.)

In previous years, Petron’s jet fuel sales to PAL account for 4% of the oil firm’s total domestic sales volume.

“We hope to be able to turn [PAL] around as quickly as possible,” said Ang.

Financial performance

Both PAL and Petron did not perform well in the past quarters.

Petron registered a whopping 28% loss in net income in the first quarter of the year

On the other hand, PAL’s October to December net income was dragged down $33.5 million by skyrocketing jet fuel prices and intense labor issues.

How will San Miguel steer both firms to better financial performance in the months ahead?

“If I tell you all the strategy, everyone will be following. But we are very confident we know what to do,” replied Ang. – Rappler.com

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