San Miguel buys 49% stake in PAL for $500 mn

San Miguel said Wednesday it had bought a 49-percent stake in loss-making Philippine Airlines for $500 million as part of a strategy to move away from its beer and food businesses.

San Miguel, one of the Philippines' biggest conglomerates, said it planned to help modernise PAL's ageing fleet and rejuvenate Asia's oldest commercial airline, which has lost its status as the nation's top carrier in recent years.

San Miguel president Ramon Ang said the $500-million investment had bought his company a 49-percent stake in PAL and its low-cost offshoot, Airphil Express.

"The new investment will allow the two airlines to strengthen operations and stay competitive with the implementation of PAL and AirPhil's fleet modernisation," said a joint statement from PAL chairman Lucio Tan and San Miguel.

Billionaire Tan, the country's second-wealthiest man, is PAL's controlling shareholder.

Cash-rich San Miguel, one of the country's largest companies, began as a Manila brewery in 1890 and grew into Southeast Asia's largest food company. Over the past decade, it has diversified into a wide range of businesses.

Its purchase of the PAL stake dovetails with recent investments, including a controlling stake in Petron Corp., the country's top oil refiner and a key jet fuel supplier, as well as its recent involvement in airport development.

Other recent acquisitions include US giant ExxonMobil's refinery and retail stations in Malaysia, and a third of top power distributor Manila Electric.

San Miguel has also branched out into toll highway and rail system construction and operation.

PAL, which began flying in 1941, reported a net loss of $33.5 million in the three months to December, reversing a profit of $15.1 million from the same period the previous year.

It had said the losses were mainly due to soaring fuel costs, and added that it was looking for fresh money to upgrade its fleet, which has lost its status as the nation's most popular carrier to low-cost rival Cebu Pacific.

PAL was also forced to cut hundreds of flights in September after a day-long wildcat strike by ground crew who were protesting the outsourcing of 2,600 catering, airport services and call centre reservation jobs.

It took the airline more than a month to cut the flight backlog.

San Miguel shares rose 0.79 percent Wednesday to close at 114.40 pesos ($2.67).

PAL's listed parent PAL Holdings dropped 0.12 percent to close at 8.29 pesos.

Editor’s note:Yahoo Philippines encourages responsible comments that add dimension to the discussion. No bashing or hate speech, please. You can express your opinion without slamming others or making derogatory remarks.

  • The other side of Palawan Ellen Tordesillas, Contributor - The Inbox
    The other side of Palawan

    By Ellen T. Tordesillas Mention Palawan and what comes to mind are  Underground River and El Nido in the northern side of this richly-blessed province from its capital, Puerto Princesa. Three  weeks ago, we went to the southern side- in … Continue reading → …

  • What can void a new car warranty? James Deakin - Wheel Power
    What can void a new car warranty?

    "I was denied warranty once for changing my horn!" One very annoyed reader wrote. "I was told that placing a backup camera will void my warranty" said another. The others are best left in my private inbox as Yahoo! have a swear jar in the office that I do not feel like donating this week's pay to. Continue reading → …

  • Docu exposes destruction of PH marine resources VERA Files - The Inbox
    Docu exposes destruction of PH marine resources

    By Kiersnerr Gerwin Tacadena, VERA Files "Gutom (hunger)," Sen. Loren Legarda said is what’s in store for the Filipino people if destruction of the country's marine resources is not stopped. Legarda, chair of the Senate committee on Environment and Natural … Continue reading → …

Poll Choice Options