MVP in "deep talks" to buy PAL: source

By VG Cabuag, BusinessMirror

Posted at Sep 22 2011 07:20 AM | Updated as of Sep 22 2011 07:03 PM

MANILA, Philippines - Despite denials from both Philippine Long Distance Telephone Co. (PLDT) and Philippine Airlines (PAL), talks persist that the telecom giant may indeed be the “white knight” of the country’s flag carrier.

The latest: The group of Manuel V. Pangilinan is already in “deep talks” and has “agreed in principle” with the top management of PAL to buy the flag carrier, according to a source close to the telecom executive.

The source said Pangilinan, chairman of PLDT, is just waiting for PAL to resolve its conflict with the Philippine Airlines Employees Association (Palea) before taking over.

“Manny [Pangilinan] feels bad whenever he gives only 14th month pay. He believes employees should be financially motivated but that is only possible if he has manageable number [of workers],” the source said. “He strongly favors the move to outsource.”

PAL has decided to outsource a sizable number of its work-force requirement, which may lead to the retrenchment of at least 2,600 employees.

One of the three service providers in PAL’s outsourcing plan is SPi Global, a wholly owned subsidiary of PLDT, which will be handling call-center reservations.

The source said Pangilinan wants the present owners to trim the flag carrier’s work force on its own, rather than come in and implement a downsizing scheme, just like he did when he assumed as PLDT’s chief executive in 1998.

The source, who already made several business deals with Pangilinan, said since PAL’s labor dispute is of public interest, the PLDT chairman is confident that the Court of Appeals would move quickly so that Palea would agree to an amicable settlement.

The Aquino administration, through the Office of the President, has already affirmed and supported the Department of Labor and Employment decision on the legality of PAL’s move to outsource a chunk of its work force.

The Court of Appeals, however, has yet to deny or grant the motion for reconsideration filed by Palea after the appellate court upheld the validity of the outsourcing move of PAL since it falls under the “management’s prerogative.”

Late last week, it was revealed that PLDT and Metro Pacific Investments Corp. have set up a new aviation company, Pacific Global One Aviation Inc., fanning speculations that it will invest in PAL.

PLDT executives have denied the rumors that it will use the company to buy into PAL.

“We are not putting up an airline business like PAL nor are we acquiring PAL.  That is so wrong. We are just centralizing the business or, rather, rationalizing the resources we have,” PLDT President Napoleon Nazareno told reporters on Monday.

The source, however, said he is not privy on what entity Pangilinan is using to buy PAL.Pangilinan is also the chairman of Metro Pacific, Philex Mining Corp., Manila Electric Co. and Metro Pacific Tollways Corp.

PAL President Jaime Bautista, for his part, said on Monday he is not aware of any talks involving new investors, including Pangilinan nor his rival Ramon Ang, president and chief operating officer of San Miguel Corp.

But on Tuesday, Bautista admitted to the BusinessMirror that there have been talks in the past “but with a foreign airline.” “For now I know the talks have not been revived,” he said in a text message. “Maybe if we start to implement the outsourcing [plan], talks may be revived.”

Documents filed with the Securities and Exchange Commission, which were approved on September 15, showed that the new PLDT aviation company has an authorized capital stock of P430 million, with common shares worth P400 million and P30 million worth of preferred shares.

The documents stated that the primary purpose of the new company is “to carry on, by means of aircraft of every kind or description, the general business of common and/or private carrier, air taxi or charter engaged in the transportation for itself and for others, of passengers, mail, merchandise and freight, and in this connection, to acquire, purchase, lease, construct, own, maintain, operate and dispose of aircraft of every kind and description, for scheduled and nonscheduled flights, for domestic and foreign travel, and also to own, purchase, construct, lease, operate and dispose of hangars, transportation depots, lounge facilities, aircraft service stations and agencies and other objects and services of similar nature which may be necessary, convenient or useful as an auxiliary to aircraft transportation, including the service and repair of aircraft, ground handling, and buying, selling and generally dealing in oils, gasoline, fuel, aircraft accessories and equipment and goods, wares and relate merchandise of every name and description.”