To infuse US $1 Billion for Fleet Expansion
January 24, 2012
Food and beverage giant San Miguel Corporation has agreed to buy shares of PAL Holdings and finance the refleeting and modernization program of Philippine Airlines. PAL Holdings directly owns 81.57% of Philippine Airlines.
The deal includes budget carrier Airphil Express, its low cost subsidiary.
San Miguel offered $500 million in cash and another $500 million in equity infusion in exchange for a 49-percent stake in both PAL and Airphil, but secures management control of the two airlines.
A disclosure to the Philippine Stock Exchange said San Miguel Corporation would increase the capitalization of PAL and its low cost subsidiary to buy new aircraft.
PAL Holdings Chief Finance Officer Susan Lee confirmed to the stock exchange investments by San Miguel in PAL Holdings.
The plan calls for the purchase of 12 medium sized long-ranged planes either from Airbus or Boeing, with Airline engineers taking a closer look and evaluation at the Airbus 350-900 planes which order is scheduled to be announced before the end of the year. First aircraft delivery is scheduled to take place in March 2016.
"Wide-bodied aircraft are needed. You need to pay delivery fees. That’s where the cash is needed,” Airline President Jaime Bautista said.
San Miguel is currently holding due diligence audit with the airline which is expected to be finish next week. Joint announcement is expected on the next General Assembly Meeting in April.
As a result of San Miguel investment, Lucio Tan would remain chairman of PAL with San Miguel President Ramon Ang, as its Chief Executive Officer. PAL president Jaime Bautista will remain Chief Operating Officer.
PAL Holdings operates a fleet of 51 aircraft and 22 on orders as of March 2011.
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