Lucio Tan confirms PAL for sale

By VG Cabuag, BusinessMirror

Posted at Jan 23 2012 07:30 AM | Updated as of Jan 23 2012 06:44 PM

MANILA, Philippines - Tycoon Lucio Tan has finally confirmed that he is selling Philippine Airlines (PAL), the country’s flag carrier, “at the right price.”

Tan, chairman and chief executive officer of PAL, acknowledged he was talking to the top executives of conglomerate San Miguel Corp. and Philippine Long Distance Telephone Co. (PLDT) for the possible sale of the struggling flagship carrier.

“Both are my friends,” Tan said in an interview with reporters on Friday, during the annual reception of the Bangko Sentral ng Pilipinas for the banking community.

He was referring to San Miguel’s top honcho Ramon S. Ang and PLDT Chairman Manuel V. Pangilinan.

Tan said he has “not yet decided” how much of the flag carrier would be sold.

Rumors circulating the business community said Ang and Pangilinan were ready to infuse $1 billion to buy part of PAL Holdings, which has been denying buy-in talks since last year.

PAL is 94 percent owned by PAL Holdings Inc., led by Tan.

In September, Ang said he was merely giving business and strategy advice to Tan, whom he considers a close friend.

Ang had also clarified he was in direct talks with Tan but in a personal capacity, and not as president of San Miguel.

Rumors on Pangilinan’s plan to acquire the flag carrier, on the other hand, circulated after PLDT and Metro Pacific Investment Corp. set up the Pacific Global One Aviation Inc. Pangilinan chairs both companies, as well as Philex Mining Corp., Manila Electric Co. and Metro Pacific Tollways Corp.

But Pangilinan has reportedly decided not to push through with the bid, saying the acquisition into PAL would raise a conflict-of-interest issue with his business partner John Gokongwei, who owns Cebu Pacific.

PLDT last year bought 98 percent of the Gokong­wei-owned Digital Communications Phils. Inc. (Digitel) for about P69.2 billion.

Of the 36 aircraft currently in the PAL fleet, five are Boeing 747-400s that were purchased during the carrier’s first refleeting program more than two decades ago.

PAL earlier admitted it may face difficulties if it continues the refleeting program on its own.

Other than the five B747s, PAL’s fleet also includes two B777-300ER, four Airbus 340-300, eight A330-300, 13 A320-200, and four A320-319.

The company is expecting a net loss in its fiscal year 2011—April 1, 2011-March 31, 2012—a reversal of the $72.5-million profit recorded in FY 2010.