Philippine Airlines has signed a deal giving San Miguel Corp. a minority stake
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.