Wednesday, December 28, 2011

News Update 'San Miguel eyeing investment in PAL

MANILA, Philippines - Food-to-infrastructure conglomerate San Miguel Corp. (SMC) has reportedly firmed up talks with the group of tycoon Lucio Tan for a possible investment in flag carrier Philippine Airlines (PAL), a local news network said yesterday.
A report by quoted multiple sources confirming negotiations between SMC and PAL, going as far as saying that SMC officials inked a memorandum of understanding with PAL last Friday to do “due diligence” work on the flag carrier until Jan 31.
Although rumors about the sale of the struggling airline have been persistent this year, both PAL and SMC officials have denied these reports.
PAL president and chief operating officer Jaime Bautista earlier downplayed reports that the flag carrier is up for sale, while SMC president Ramon S. Ang denied rumors that the company would acquire PAL.
There have also been reports that telecom magnate Manuel V. Pangilinan has sent feelers for PAL.
Ang, in an earlier report, said he was merely discussing with Tan, a close friend, ideas to help PAL in its current predicament.
“We often talk about PAL, so whatever way I can do to help him, I’m going to do it... There are no talks of acquisition. Right now, I am talking to Tan about PAL – brainstorming for ideas on how to help him, that’s it. By the way, Lucio Tan is a tycoon, he’s super-rich and he does not really need anybody’s money,” Ang said.
As part of its restructuring program, the airline has been streamlining its operations in recent years but was met by stiff opposition from its employees’ labor unions.
PAL implemented an outsourcing program last Oct. 1, affecting some 2,300 airline workers involved in its airport services, catering and call center reservations. PALEA, the association of ground and service crew, has continued its protest against the outsourcing program.
PAL, however, admitted it does need fresh equity from investors, if it wants to expand and grow in the future.
Asked if the airline would welcome new investors, Bautista said: “PAL management would welcome that. PAL really needs equity for us to grow.”
The 70-year-old airline, majority owned by Tan, had incurred losses of roughly $300 million from 2008 to 2010.
For its first quarter of 2011 (April to June), PAL reported a total comprehensive loss of $10.6 million, compared to $31.6 million comprehensive income for the same period in 2010.