Lucio Tan group wants PAL foreign investor in by 2017
MANILA, Philippines – The group of mogul Lucio C. Tan plans to sell up to 40% of the country’s oldest airline Philippine Airlines Incorporated (PAL) to a foreign investor by 2017 – before it triples its public float.
It was in November 2014 – weeks after the exit of San Miguel Corporation – when PAL Holdings President and COO Jaime Bautista first spoke about his group’s plans to have a foreign strategic investor to help manage the then-struggling airline.
Asked for an update, Bautista said last week that his company "would want to have a strategic partner before we do additional public offering for PAL. PAL Holdings is controlled by the Lucio Tan group so we’re looking for a possible strategic partner that could help management."
PAL Holdings plans to increase its 10.22% public float once it secures a strategic investor, which according to Bautista, could be "late 2017".
PAL’s Bautista said, "Under the Philippine Law, foreign investors are allowed up to 40%, so [we are willing to sell] up to 40%."
Bautista added that the entry of a foreign investor will allow PAL to join an alliance and increase its market value.
"Right now, we will need a strategic investor. Hopefully, from the same industry, but covering different regions so it can give us more connections," Bautista said, adding that "it does not have to be an airline, too."
PAL, which just ended 2014 in the black, had limited its foreign partnership to just code-sharing with airlines such as Etihad Airways and Japan’s All Nippon Airways (ANA).
"We don’t need that additional equity. But as we expand, in about two years, we’ll want to buy new airplanes, and that we will require equity infusion," Bautista told reporters last year in a media briefing.
The group of Tan in 2014 borrowed from a syndicate of banks to partly finance the $1-billion deal to buy out San Miguel from the airline. San Miguel owned 49% of the parent of the listed holding company, PAL Holdings, that in turn controls around 90% of the airline.
With management control back to PAL, Bautista said he is making the airline more attractive for the entry of a new foreign partner.
Asked if his company is already in talks with any prospects, Bautista said, “Not yet. Nothing concrete yet."
PAL in June secured a deal to lease two Boeing 777-300ERs to boost its operations to the US and London.
The two new Boeing planes bring to 78 the total number of PAL’s fleet. These jets will be acquired by way of an agreement between leasing firm Intrepid Aviation and PAL.
Currently, PAL has 6 Boeing 777-300ERs, currently serving the Manila-San Francisco and Manila-Los Angeles routes.
"I want PAL to be a 5-star airline, with good service from the time they buy their ticket to the time they get their baggage from the carousel," Bautista said. – Rappler.com