MANILA - Flag carrier Philippine Airlines (PAL) has dropped plans to take in Japanese airline All Nippon Airways (ANA) as an investor in the flag carrier.
“Originally, what ANA wants is an investment but later on many meddled in the talks so the talks on investment were shelved,” said PAL President Ramon S. Ang.
Still, PAL is pursuing a partnership with ANA via a code-share deal.
Code sharing happens when two or more airlines share the same flight. A seat can be purchased on one airline but is actually operated by another using a different flight code.
“We are talking [about] code sharing. We are looking at what we can do together to be able to improve our service. We hope to be able to close the deal within 30 days,” said Ang.
In July last year, San Miguel Corp. (SMC), which holds a 49-percent stake in PAL, admitted it was engaged in preliminary talks with ANA for a possible partnership in the flag carrier.
Businessman Lucio Tan still controls PAL with his 51-percent stake but unverified reports have surfaced that the tycoon is interested in selling. SMC has the option to buy Tan’s stake in the airline.
In April last year, SMC infused $500 million for the purchase of a 49-percent equity interest in Trustmark Holdings Corp.
Trustmark owns 97.71 percent of the airline’s parent firm, PAL Holdings Inc., which owns 84.67 percent of the airline company through PR Holdings Inc.
In a July report of aviation think tank Center for Asia-Pacific Aviation (CAPA), a possible partnership between PAL and ANA will be challenged by very few synergies.
“The possible synergies between ANA and PAL are few. PAL has contentiously exited the Philippines’s key low-cost segment and its long-haul ambitions will be challenging given the competition, its lack of geography or scale for connecting traffic, and a low profile without a global alliance or numerous partners.”
CAPA observed that talks between the two airlines are “good and productive” but it believes that it is “not yet the end game” as ANA is still in search for a worthy suitor.
Awash with cash, CAPA said ANA intends to invest in foreign airlines in order to secure new channels of growth, amid the declining population in Japan. However, CAPA said an international acquisition by ANA “will take a lot of exploratory efforts with prospective airlines that do not come to fruition.”