Entry of ANA in PAL may happen soon

MANILA, Philippines — The entry of Japan’s ANA Holdings Inc. in Philippine Airlines (PAL) may happen as early as this week, sources said.

Barring any hitches in the negotiations, the parties may sign an agreement for ANA’s investment of a minority stake in PAL this week.

If this proceeds as planned, there will then be a meeting in Tokyo among representatives of ANA and Philippine Airlines in the first week of February, sources also said.

ANA said last week it is in talks with PAL’s parent company PAL Holdings about making an investment in the Philippine’s flag-carrier, but noted that no concrete decision has been made.

Taipan Lucio Tan, chairman of PAL, did not confirm the talks when interviewed by reporters on the sidelines of the Bangko Sentral ng Pilipinas’ annual reception for the banking community last week.

Tan, who attends the yearly event, however, said in previous bankers’ receptions that he was open to selling a stake in PAL to strategic investors.

ANA’s investment, if it proceeds, may comprise of a roughly 10 percent stake in PAL Holdings in a deal valued at $91 million, according to Nikkei.

The entry of a strategic investor would be a big boost to PAL’s plan to become a five-star global airline by 2020.

An alliance would also help the carrier expand its flights.

Last year, PAL vice chairman Lucio Tan Jr. said in an interview that there were many interested investors from China, Middle East, Europe and regional airlines.

ANA or All Nippon Airways Co. Ltd. is the largest airline in Japan on the basis of fleet size. It is headquartered at Shiodome City Center in the Shiodome area of Minato, Tokyo, Japan.

Market investors welcomed the possibility of a strategic investor entering the listed PAL Holdings, sending its shares to surge 41.6 percent last Wednesday and bucking the market index, which dropped 0.24 percent. On Friday, PAL shares closed at P13.94 per piece, down 12.66 percent.

In late 2013, PAL also entered in talks with ANA when PAL was then under the control of former president Ramon Ang but the talks did not materialize.

The elder Tan, the country’s fourth richest man according to Forbes, took over PAL in 1993 and led the company’s rapid fleet expansion. However, the 1997 Asian financial crisis affected the flagship carrier, bringing it on the verge of collapse with a $2.2 billion debt.

But the Tan-led PAL survived the crisis and has since expanded its fleet. Last year, the London-based Skytrax certified PAL as a four-star carrier, making it the only four-star airline in the country.

Tan earlier consolidated his airline businesses ahead of the entry of a strategic investor.