By Cris Larano
MANILA--Philippine Airlines controlling shareholder Lucio Tan is
again on the hunt for a strategic partner for the airline shortly
after parting ways with San Miguel Corp. (SMC.PH), and aims to seal
a deal within three years, the carrier's returning president, Jaime
Bautista, said.
"We want a strategic investor in the next two to three years,"
Mr. Bautista told reporters after launching Friday the return of
PAL--as the airline is popularly known--to New York after an
18-year absence. "It will be better if it is another airline or at
least a company with investments in an airline," he added.
In September, a little over two years after San Miguel bought a
49% stake in the airline for $500 million, Mr. Tan--through various
holding firms--bought the diversified Philippine conglomerate out
of PAL, restoring billionaire Mr. Tan in full control of Asia's
oldest carrier. San Miguel had initiated several projects in the
airline, the most significant of which was a $10 billion
re-fleeting to replace older jets with more fuel-efficient
aircraft.
Mr. Bautista said the re-fleeting is now under review, including
the delivery of some 28 narrow-bodied Airbus jets scheduled for
delivery between 2016 and 2022. PAL now has 70 aircraft and will
take delivery of 10 more Airbus jets in 2015.
He said the deployment of 15 Airbus A330s that San Miguel
ordered to service Middle East routes is being assessed to maximize
their usage. He said those planes are underutilized because
Philippine Airlines didn't get the slots and flight frequencies it
hoped to secure in the region.
For now, the airline doesn't need a fresh equity infusion,
having raised though borrowings and cash flow the $1 billion used
to pay San Miguel for its stake and repay shareholder advances to
support the re-fleeting and operations of the airline.
Mr. Bautista said the New York route is potentially profitable
since around half a million Filipinos live on the East Coast of the
U.S., with 253,000 living in the New York-New Jersey area. He said
PAL is aiming for at least a 30% share of the Filipino market in
the area.
Listed PAL Holdings (PAL.PH) owns around 98.2% of Philippine
Airlines.
Write to Cris Larano at cris.larano@dowjones.com;
@CrisLaranoWSJ
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