Tan not selling PAL

Denies Rumors for good!

June 11, 2010

Manila - Lucio C. Tan is not about to give up Philippine Airlines (PAL) despite burgeoning losses, labor problems, and stiff competition from budget airlines.

“Not for sale,” Mr. Tan, chairman of PAL Holdings, Inc., said Thursday after Eton Properties Philippines, Inc.’s annual stockholders’ meeting in Makati.

First Pacific Co. LTD. of Hong Kong headed by Manuel V. Pangilinan was in talks with one of the sons of tycoon Lucio Tan to pursue his take-over bid for PAL but the offer fizzled out when the mogul said no to one of the Philippines largest business conglomerate.

San Miguel Corporation has also expressed interest in acquiring a majority share of the Flag carrier but Lucio Tan declined the offer.

SMC president and chief operating officer Ramon S. Ang said that they wanted to buy at least 51 percent of PAL but Tan is not about to give up his control of the airline who also has received offers from foreign airlines who are now conducting due diligence with the company for a substantial minority stake.

But airline President Jaime Bautista denied such offer was made and was surprised by the revelation.

"We only learned of Mr. Ang's alleged plan to buy into PAL through the newspapers. If he is seriously considering to buy a majority stake in any company, he should approach the owners rather than tell the press." Bautista said.

Bautista confirmed that neither Metro Pacific nor San Miguel had talks with them on possible investments but doesn't state categorically whether there was a talk made between the Tan group and Metro Pacific or San Miguel on the other.

The PAL President does say that they are actively engaged in ongoing talks with prospective investors whom he doesn't want to divulge as they are still on preliminary talks with the foreign investors.

“We are looking at fresh equity that will go directly to PAL,” Bautista said, meaning the airline would be offering new shares to obtain new capital.

Bautista stressed that Tan wanted to keep majority control of the company 92% of which he owns while opening the carrier to new investors.

“The preference is for Mr. Tan to maintain majority control of the airline,” Bautista added.

PAL has been on the red for the past three fiscal years with consolidated losses over $350 million, or P15 billion.

Adding to its woes is the decline of international passenger traffic due to worldwide economic recession and the stiff competition offered by budget carrier like Cebu Pacific, which recently surpassed PAL as the dominant domestic carrier of the country flying 2.35 million passengers in the first quarter of this year as compared to PAL's 2.34 million.

The airline wants to lay off 3,000 workers and outsource non-core operations to cut losses. In its restructuring program, the airline wanted to spinoff the inflight catering services; airport services, including ground handling, cargo terminal/cargo handling and ramp handling; and call-center reservations at the close of business hours on May 31. But the plan was put on hold by the Labor Department last April until the labor dispute with the PAL Employees Association is resolved.

PAL had net loss of $40.2 million for nine months of its current fiscal year, narrower than the $330.2 million reported the previous year. Its consolidated losses was trimmed further to $14.3 million for its fiscal year ending March 2010.

No comments:

Post a Comment