PAL says Lucio Tan's statement on sale rhetorical

Posted at 01/25/12 9:11 AM

MANILA, Philippines - The management of Philippine Airlines (PAL) said yesterday that company chairman Lucio Tan’s statement about selling the flag carrier “at the right price” was merely a one-liner, rhetorical response to questions fielded by reporters during an ambush interview over the weekend.

“PAL management is not aware that Mr. Tan is selling any of his shares and what is deemed the ‘right price’. Normally, a response of this nature cannot be taken on its face value. It could be subject to various interpretations,” PAL vice president for corporate communications Joey de Guzman said.

He noted that Tan’s off-the-cuff remark on his alleged willingness to sell was conditioned on price. “He didn’t say when he wants to sell, how much of his shares he will let go, to whom it will be sold or what the ‘right price’ is. Clearly, it’s not simply about what he said, but what he didn’t say,” he stressed.

While Tan said he considers Ramon Ang of San Miguel Corp. and Manuel Pangilinan of Metro Pacific as his “friends”, the PAL chairman never said he was negotiating with them, De Guzman added.

“It’s easy for media and other parties to draw conclusions from Mr. Tan’s one-line remark, but we believe that talks of any sale are speculative at best,” he stressed.

Tan was earlier quoted as saying “if the price is good,” when asked if he is selling a majority stake in PAL.

He also confirmed that “some of his friends” have expressed interest in investing in PAL. These friends include Ang and Pangilinan.

He, however, provided no details if there were indeed formal negotiations with specific parties as well as top-level talks with potential investors and his reasons for selling.

Diversifying conglomerate San Miguel earlier confirmed its interest to pursue a prospective investment in PAL.

“We confirm that the company was invited by Mr. Lucio Tan, the controlling stockholder of PAL Holdings Inc., to participate and assist in the re-fleeting and modernization of the aircraft of Philippine Airlines in preparation for the projected heavy influx of tourists in the coming years, which will be beneficial to the tourism industry of the country,” San Miguel said in a disclosure to the Philippine Stock Exchange.

But in a separate disclosure, PAL’s parent company PAL Holdings said: “…There is presently no discussion on possible investment by San Miguel Corp. in PAL Holdings Inc.”

While San Miguel is interested in the airline operations of PAL, it remains uncertain whether the conglomerate is keen on investing in the parent company level.

Other sources said the tycoon had been willing to let a new investor come in for at least $1 billion but apart from equity, this would include part of re-fleeting costs.

PAL president and chief operating officer Jaime Bautista stressed the company’s controlling shareholders were not actively looking for new investors to fund expansion plans.

“There is no search,” he said, adding that the reported signing of a memorandum of agreement between San Miguel and PAL were unfounded.

Bautista admitted that several parties, including San Miguel, have approached PAL officials over the possibility of acquiring a stake in PAL. Other interested groups include foreign airlines and local business groups.

“[But] I am not aware of any signed documents [with San Miguel],” he said.

Earlier, PAL revealed that it planned to replace several of its aging planes with more efficient new ones in a bid to cut costs amid high fuel prices. Covered by the plan are PAL’s fleet of Boeing 747 jumbo jets, long-range Airbus 340s, mid-range A330s and short-range A320s.

Industry sources said San Miguel, through its president Ramon Ang, had presented a very good offer that was accepted “in principle” by the Tan Group before Christmas.

The airline business is in line with San Miguel’s diversification into infrastructure-building. San Miguel is investing about $300 million to modernize and set up new tourism amenities at the Godofredo P. Ramos airport in Caticlan, the main gateway to the world-famous Boracay Island. The conglomerate has also expressed interest to participate in the public bidding for the Public-Private Partnership (PPP) airport contracts for Palawan, Bohol and Caraga (Agusan).

His business rival, First Pacific Co. Ltd. executive director Manuel V. Pangilinan, was likewise looking at PAL and was earlier reported to be the front-runner in the race to acquire the flag carrier. Pangilinan earlier offered $700 million to take over the airline, industry sources said.– With Rudy Santos