LT Group seeks foreign investor for PAL after San Miguel split

After parting ways with San Miguel Corp., the Lucio Tan Group is gearing up for potential strategic investors in Philippine Airlines (PAL) as the company continues to strengthen the flag carrier's operations by adding more destinations and frequencies in existing routes.

 

PAL management is now focusing on more routes and higher flight frequencies, the crucial elements to attracting a foreign strategic investor, PAL president and CEO Jaime Bautista told reporters during the launch of New York flights in Manila.

 

PAL can sell up to 40 percent of equity to the foreign investor, as stated under Philippine laws, Bautista noted.

 

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

 

In the next 12 months, PAL will mount additional flights to Guam, Honolulu, Australia and other regions it currently operates in.

 

PAL launched its Manila-Vancouver-New York flights, which start on March 15, 2015, bringing its total US destinations to four, including Los Angeles, San Francisco, and Honolulu. It would be five including Guam as a US Trust Territory.

 

The latest destination came after the Philippines gained an aviation safety upgrade to Category 1 status from the United States Federal Aviation Administration (FAA), six years after the agency downgraded the Philippines on air safety issues.

 

In the medium term – or in the next two to three years – PAL is looking at launching new destinations. 

 

PAL's operations will be a priority criteria for a potential investor, Bautista noted.

 

"Right now, we don't need that additional equity. But as we expand, we'll want to buy new airplanes, we'll have to require equity infusion," he said.

 

"If you're an investor, you'll look at operations of an airline. What we're doing now is really the start of the process... of getting an investor," the PAL official added.

 

Bautista said there are companies they are currently looking at, but "we are not at liberty to disclose."

 

In 2012, diversified conglomerate San Miguel Corp. bought 49 percent of the parent listed PAL Holdings Inc., the airline operator, from the Lucio Tan Group for $500 million.

 

PAL Holdings controls around 90 percent of the airline, which has a market value of about $3.4 billion.

 

Last September, San Miguel agreed to a $1-billion deal to sell its stake in PAL back to the Lucio Tan group. – VS, GMA News