A chat with RSA

Monday, March 4, 2024, San Miguel Corporation chair and CEO Ramon S. Ang had lunch for three hours and half with a group of senior newsmen, bloggers and lawyers, at the sprawling suburban SMC headquarters in Ortigas.

The group was composed of lecturers in a series of SMC-sponsored ED Talks seminars for the benefit of regional journalists, from north, central and south Philippines.

Ongoing for the last five years, ED Talks tackled various aspects of journalism – reporting, writing, editing, business writing, broadcast, column writing, video and photo journalism, blogging, libel and cybercrime, with veteran Manila journalists and experts as lecturers. The idea is to empower regional journalists and advance Philippine journalism. I was invited to lecture on economic journalism and political journalism twice, in Baguio and in Malolos.

On the program’s fifth anniversary, RSA tendered a thank-you luncheon.

We got a rare ringside view of the SMC CEO – his management philosophy, how he spends a typical day in business and his family, his training, habits and toys (flying, fast cars and motorbikes). RSA walked into SMC’s Executive Dining Room wearing a custom-made grey ED Talk hoody jacket, black pants and black slippers (the clogs make him relax, he says).

An engineer, RSA is a self-taught auto mechanic, jet plane mechanic, jet pilot, a voracious reader on finance, business, engineering, technology and, lately, aviation.

He also has tremendous people skills and infinite capacity to break down problems into bottomlines. Building empires, he is brilliant at visioning and in reverse-engineering a technical product or vast business.

Over 80 percent of SMC’s P1.5 trillion in annual revenues are all because of his efforts to diversify, beginning in 2009 when the conglomerate had revenues of only P174 billion. Thus, P1.33 trillion of SMC sales today come from businesses where RSA moved into, in the last 15 years.

On Feb. 16, 2024, San Miguel won the bidding to manage and modernize the Ninoy Aquino International Airport (NAIA) over the next 15 years, with the contract renewable by 10 years.

SMC won hands down, offering to pay the government 82.16 percent of airport revenues, except passenger terminal fees where the sharing is 70 percent in favor of the government and 30 percent for SMC. In 25 years, the 82.16 percent translates into a whopping P911.11 billion (almost P1 trillion).

The GMR Consortium of the Yuchengco group bid the second highest, 33.30 percent, or P416.9 billion in 25 years.

The Manila International Airport Consortium (of six conglomerates, Ayala, Aboitiz, Andrew Tan, Gokongwei, LT Group and Gotianun) offered the smallest, 25.91 percent, P342.1 billion in 25 years. The P342.1 billion was already a huge improvement over MIAC’s two previous unsolicited offers – P70.1 billion in 2020 and P100.7 billion in 2023.

Having won the Deal of the Century, RSA was of course peppered with questions by his inquisitive guests.

Wasn’t he crazy for having quoted P911 billion to get the right to manage an airport dubbed several times as the world’s worst?

“Of course not!” RSA asserted, smiling. Firstly, he pointed out that another bidder, the group of retailing king Lucio Co and Jeffrey Cheng, offered 76 percent of its revenues, or P848.8 billion – very close to San Miguel’s bid. “Those guys know their numbers,” says Ramon.

Co and Cheng were, however, disqualified for failing to hurdle the technical evaluation phase. Their group was composed of Cosco Capital, Asian Infrastructure and Management, Philippine Skylanders International and PT Angkasa Pura.

Secondly, “I have long ago studied NAIA, before anybody had thought of making an offer,” RSA recalled. The studies were prompted by preparations for the P740-billion Bulacan Aerocity of San Miguel. So he knows the technical aspects of building an airport and its market potential.

Ready by 2028, SMC Aerocity will have six runways, capacity to handle up to 200 million passengers and an ecozone sprawled over 55,000 hectares of prime land cheek-by-jowl to Manila Bay.

The SanMig CEO revealed three principles of success of getting into a project or business – one, prepare the right studies, with the help of experts; two, watch out for the cash flow and three, be hands-on, relentlessly. “Be there every day so you can act quickly anytime a problem arises.”

From Year One at NAIA, RSA promises to make money, even after paying the huge 82 percent share of the government, beginning with an EBITDA (effective cash flow, before interest, taxes and depreciation) of P1.1 billion in the first year, rising exponentially to P9.5 billion in the second, P10 billion in the third, P12 billion in the fourth and so on.

In 30 months, if not less, he guarantees to deliver a totally modern, almost new NAIA – with a new terminal building, a new runway, a new taxiway, eight floors of parking space and yes, new toilets. The new taxiway will be built in 24 months; the new terminal will be completed in 30 months.

NAIA will have three runways. Runway 13/31 will be moved backward by 300 meters to provide elbow room for Runway 06/24 so the two runways will no longer intersect or form a letter T and can thus operate independently of each other. Separating the two runways, plus an additional taxiway (for 06/24), has the potential of doubling NAIA’s aircraft movements in three years.

At the same time, part of the present Terminal I will be eaten up by expanded runways and a new taxiway. The existing Lufthansa Maintenance Apron will be converted into a Taxiway Lima. The three major terminals – I, II and III – will be connected by walkalators, not buses. The Department of Transportation had wanted buses.

Ramon Ang will double NAIA’s annual capacity from the present 29 million passengers in three years to 62 million, as required by the bid rules.

Good luck and congrats, RSA.

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