PAL sees entry of strategic investor within 2017
PAL HOLDINGS, Inc. intends to take in a strategic investor before selling shares to the public, as tycoon Lucio C. Tan, Sr. expects to seal the consolidation of his airline ventures within the quarter.
PAL President and Chief Operating Officer Jaime J. Bautista told reporters late Friday the country’s flag carrier hopes to complete talks with a strategic investor this year and give up a stake equivalent to a maximum percentage allowable by law.
Under the Philippine Constitution, foreigners cannot own more than 40% of certain industries, including transportation.
“We’re looking at finalizing a deal with a strategic investor. Hopefully if we still need funds, we can do a re-IPO,” Mr. Bautista said. He declined to provide estimates for future fund-raising initiatives.
LT Group, Inc. President Michael G. Tan, the tycoon’s son, reportedly said last month that PAL plans to embark on a re-IPO this year. LT Group is the holding company for the tycoon’s consumer businesses.
PAL entered the Philippine Stock Exchange in 2007 via the “backdoor” with a takeover of Baguio Gold Holdings Corp.
PAL is in talks with investors with expertise in running carriers so it can help the company manage its fleet and reach five-star full service carrier status by 2020. Proceeds from the share sale will bankroll its expansion.
“It takes time for a strategic investor to finalize their decision. May mga negotiations pa ’yan (There will be negotiations). You have to agree on valuations, management and administration of the airline,” Mr. Bautista said.
The consolidation of Mr. Tan’s airline business -- an endeavor that will help increase the appeal of PAL to investors -- is seen happening within the quarter, subject to securing pre-requisite regulatory approvals from the Securities and Exchange Commission and the Philippine Competition Commission, he said.
PAL cleared on Nov. 28 the acquisition of Zuma Holdings and Management Corp., another company controlled by the tycoon and owner of budget carrier Air Philippines Corp., through a $166-million share-swap transaction.
Mr. Bautista issued an optimistic outlook for the industry this year despite cost pressures after registering a net profit for the entire 2016.
PAL expects to passenger volume to hit the 15-million mark this year, up 11% from the 13.5 million passengers flown in 2015.
“We’re looking at more Filipinos travelling, even domestic, regional or international. It’s a good outlook although for us, because of competition there are a lot of challenges because of congestion at the airport. We are practically one runway in Manila. Our ability to grow is limited,” Mr. Bautista sad.
The flag carrier hopes the government can build a new airport since it will be crucial to unlock the company’s growth potential.
“We need to grow. We are taking delivery of seven airplanes (this year). Next year, 10 airplanes... Alam naman natin na ang airport natin congested (We all know that our airport is congested). We need another airport either in Sangley, Bulacan or Laguna de Bay,” Mr. Bautista said.
Shares in PAL added eight centavos or 1.56% to close at P5.22 apiece on Friday.