MANILA, Philippines - Businessman Manuel V. Pangilinan and conglomerate Ayala Corp. are not interested in investing in the airline industry as the battle for control between the major shareholders of national flag carrier Philippine Airlines Inc. (PAL) continues to mount.
Pangilinan, who chairs dominant carrier Philippine Long Distance Telephone Co. (PLDT) and infrastructure giant Metro Pacific Investments Corp. (MPIC), said it has abandoned plans to invest in the airline industry.
“This time, investment in airline is not in the radar scene,” he told reporters on the sidelines of the press conference of the first half earnings of PLDT yesterday.
The MVP Group offered to acquire a stake in PAL two years ago but PAL chairman Lucio Tan eventually took in diversified conglomerate San Miguel Corp. (SMC) as partner.
“Yes, about two years ago,” he replied when asked if his group made an attempt to invest in PAL.
“Its maybe not within our line of business. I don’t think were good in running an airline,” he added.
On the other hand, Ayala managing director John Eric Francia said the conglomerate is not interested in the airline industry. “Everything about it is very challenging,” Francia said.
The Tan Group expects to take back full control of PAL as early as this month after completing the buy back of the 49 percent that SMC bought for $500 million in April 2012.
SMC president and chief operating officer Ramon S. Ang confirmed that the Tan Group had already made a formal offer to buy back the conglomerate’s stake in PAL.
However, he clarified that negotiations are still ongoing. “Yes, still in talks,” Ang said in a text message.
Ang is president and chief operating officer of PAL while Tan serves as chairman and chief executive officer of the airline.
After taking back full control of PAL, the Tan Group is likely to take in Abu Dhabi-based Etihad Airways as partner in the national flag carrier.
The Tan Group is reportedly raising close to $1 billion to buy back the 51 percent of SMC and to pay the advances made by the diversified conglomerate to PAL for the purchase of brand new aircraft.
In April 2012, SMC’s wholly-owned subsidiary San Miguel Equity Investments Inc. (SMEII) acquired a 49 percent equity interest in Trustmark Holdings Corp. for $500 million. Trustmark owns 97.71 percent of PAL Holdings which in turn owns 84.67 percent of PAL through PR Holdings Inc.
Since then PAL embarked on a massive fleet renewal program program with an end view of acquiring 100 brandnew aircraft.
It placed an order for the delivery of 65 Airbus aircraft worth $9.5 billion.
Ang earlier said that he is confident that the buy out talks would be concluded within the third quarter of the year so as not to derail the improvement in the airline’s financial performance.
Ang has vowed to bring PAL back to profitability after incurring heavy losses over the past few years.