Ayala Corp, MVP not interested in PAL

Posted at 08/05/2014 6:44 PM

MANILA, Philippines – Ayala Corp. and businessman Manuel V. Pangilinan are not interested in investing in the airline industry following reports that major shareholders of Philippine Airlines (PAL) are battling for control over the national flag carrier.

Ayala Corp. managing director John Eric Francia said the conglomerate is not looking to invest in the airline industry.

“Everything about it is very challenging,” he said.

Pangilinan, meanwhile, said his group has already moved on from its plans to invest in an airline.

“This time, investment in airline is not in the radar scene,” he said.

Pangilinan expressed plans to acquire a stake in PAL in 2012, but PAL chairman Lucio Tan took in San Miguel Corp. (SMC) as its partner.

“It’s maybe not within our line of business. I don’t think we're good in running an airline,” said Pangilinan, who is the chairman of Philippine Long Distance Telephone Co. (PLDT) and Metro Pacific Investments Corp. (MPIC).

SMC president and chief operating officer Ramon Ang said the Tan group has offered to buy back SMC’s stake in PAL, but negotiations are still ongoing.

Ang serves as PAL’s president and chief operating officer while Tan is the airline’s chairman and chief executive officer.

The Tan group is reportedly raising around $1 billion to buy back the 51 percent of SMC and to pay the advances made by SMC to PAL for the purchase of brand new aircraft.

If it succeeds in taking back full control of PAL, the Tan group will likely partner with Abu Dhabi-based Etihad Airways.

A source said the Tan group may offer up to 40 percent of PAL to Etihad Airways as a foreign strategic partner after completing the buy back of the shares of SMC.

PAL and Etihad Airways entered into a strategic partnership agreement in April that involved codeshare flights, loyalty programs, airport lounges, joint sales and marketing programs, a Philippines domestic air pass, cargo, and the coordination of airport operations.