Japan's Largest Airline to Buy Stake in Philippine Airlines
Philippine Airlines Inc.’s largest shareholder jumped the most in more than five years after the Nikkei reported ANA Holdings Inc. is considering investing in the Southeast Asian carrier.
ANA, Japan’s biggest airline, is considering purchasing 10 percent of Philippine Airlines for 10 billion yen ($91 million), the Nikkei reported Tuesday. PAL Holdings Inc., which owns most of Philippine Airlines, closed 42 percent higher in Manila trading Wednesday, the biggest gain since July 2013. The Philippine benchmark stock index fell 0.2 percent.
ANA is in talks with PAL Holdings, but no concrete decision has been made yet, the Japanese company said in an emailed response. Philippine Airlines Inc.’s largest shareholder jumped the most in more than five years after the Nikkei reported ANA Holdings Inc. is considering investing in the Southeast Asian carrier.
Philippine Airlines remains in talks with potential investors and a deal may happen in the first half of the year, PAL President Jaime Bautista said by phone, adding he could neither confirm nor deny the report, citing confidentiality agreements signed with parties.
An investment in PAL, controlled by billionaire Lucio Tan, would provide Philippine Airlines with funds to expand in a market where a rash of low-cost carriers have encouraged more people to fly for business and leisure in the past decade. ANA has been looking to enhance its footprint in the region after decades of near duopoly in Japan, where an aging population threatens to reduce the number of air travelers.
Ramon Ang-led San Miguel Corporation used to control 49% of PAL, until Lucio Tan's group bought back the shares in 2014. The Tan-led PAL announced weeks later that it was eyeing foreign investors to help manage the then-struggling airline.
Later that year, PAL and ANA inked an agreement covering code share and frequent flyer programs.
In 2015, PAL Holdings president and chief operating officer Jaime Bautista said they were targeting to have a foreign investor by 2017, which would effectively help them achieve the most coveted 5-star airline rating from London-based Skytrax.
Fast forward to now and talks are still ongoing.
ANA, Japan's largest airline, was founded in 1952 and has had a 5-star airline rating since 2013. It has a fleet of 260 aircraft and carried 53.8 million passengers in 2017. ANA was also recognized as Airline of the Year thrice in the past 10 years.
PAL is upgrading its fleet until 2024 as it aims to become a 5-star airline. At the moment, it is the Philippines' first and only 4-star airline.
PAL recently expanded its services to other key cities in Southeast Asia and launched long-haul flights to New York. Aircraft expected to join the PAL fleet in 2019 include two more Next-Generation Q400s, two A350s, and two more A321neos.
Source : Bloomberg.com | Rappler.com