PAL in 3-yr search for new partner

MANILA, Philippines - Taipan Lucio Tan is crafting a strategic plan that would pave the way for the entry of a foreign strategic partner into Philippine Airlines Inc. (PAL) within the next three years.

PAL president and chief operating officer Jaime Bautista said in a press conference that the Tan Group is looking at taking in a strategic partner over the medium term.

“Personally, I would like to have a strategic investor within the next three years. It will be better if it’s an airline or a company with investments in airline,” Bautista said.

He pointed out that the strategic partner that could take as much as 40-percent stake in the airline under Philippine laws would help finance the acquisition of additional aircraft for long-haul destinations.

“Well right now we don’t need that additional equity but as we expand, if we want to buy more aircraft in the future, we will have to require equity infusion,” Bautista added.

He said PAL has so far entered into code-share agreements with Etihad Airways and All Nippon Airways (ANA).

“There are names that we are looking at but we are not at liberty to discuss that at this time,” he said.

To prepare for the entry of a strategic partner, he said PAL would finalize a short term plan including the review of the airline’s fleet after San Miguel Corp. undertook a massive refleeting program after it bought into PAL through San Miguel Equity Investments Inc. in April 2012.

 “We are now reviewing our short-term, medium-term and long-term plans

At this time we cannot say categorically that we will defer this until the whole plan is finalized,” he told reporters.

“I don’t think there are too many planes because these could be used to fly so many destinations,” he said.

Bautista said PAL would be more aggressive in the domestic market including returning to its Cebu hub as budget airline Cebu Pacific has taken a 40 percent slice of the market while the national flag carriers market share fell below 40 percent.

The airline is also working to get a five-star rating by improving its system to be able to upgrade technology and at the same time improve its service as well as on-time performance.

The long-term plan, he said, would involve the acquisition of long-haul destinations that would allow PAL to fly directly to long-haul destinations such as New York.

The Tan Group through Buona Sorte and Horizon Global Investments bought back the 49 percent interest of San Miguel Equity Investments Inc. of diversified conglomerate San Miguel Corp. (SMC) last Sept. 15 for a total consideration of $1.3 billion.