SMC, partner to invest $1.5B for Cambodia air stake buy-in

Diversified conglomerate San Miguel Corporation, through Philippine Airlines (PAL), and its Cambodian partner is planning to invest $1.5 billion for the acquisition of about 20 aircraft for Cambodia Airlines.

In an interview at the sidelines of Ginebra San Miguel's stockholders' meeting, SMC President Ramon S. Ang said they aim to flu 16 to 22 planes within two years - starting with about 8 to 10 planes in the first year.

"If the business is good, we will increase some more," Ang said noting that their investment contribution is not as high because some aircraft with be acquired with financing. He explained that equity for aircraft is usually 30 percent and this will be split between the partners.

Ang said "we will be doing code sharing with Cambodia Airlines to almost all destinations," Ang said this will be for both short and long-haul flights.

"If we are able to do this code sharing with Cambodia, it will add another $300 to 400 million in revenues," Ang said adding that the PAL Group has been registering revenues of about $1.7 billion per year in the last two years.

Cambodia Airlines and SMC signed a joint venture agreement to set up a Cambodia-based airline - Cambodia Airlines - to service domestic and regional flights.

The agreement was inked between Cambodian tycoon Kith Meng, president of Cambodia Airlines, and Ang, president of under the presence of Cambodian Deputy Prime Minister and Cabinet Minister Sok An.

"These are exciting times for the local aviation industry. The establishment of a full-fledged Cambodia-based airline is a natural step for Cambodia," Kith Meng said.

Under the agreement, Kith Meng will have a 51-percent controlling share in the joint venture, while San Miguel Corporation will hold the remaining 49 percent stake.

The deal is the largest known venture between the Philippines and Cambodia.

"This joint venture is another strategic move in San Miguel's continuing diversification into fast-growing industries and economies," said Ang.

He noted that "it is also a testimony of our commitment to make a difference in any business that we participate in--whether it be in the Philippines or internationally."

He said the Philippine Airlines would bring in the expertise needed to build a world-class national carrier in Cambodia. Currently, besides the national flag carrier, Cambodia Angkor Air, there are 23 foreign airlines operating regular flights to Cambodia, according to the report of the state secretariat of civil aviation.

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