Lunes, Abril 16, 2012

Turning PAL around




The colorful history of Philippine Airlines took another major turn just before the Lenten break. San Miguel Corp., led by the aggressive 58-year-old businessman Ramon Ang, bought a 40-percent stake in, and obtained management control of, the airline.
PAL, Asia’s first airline, was a source of national pride in the 1960s, until the global crisis in the 1970s and government mismanagement clipped its wings. Hopes that it would again fly the skies profitably were revived when it was sold to taipan Lucio Tan in the 1990s. But a series of economic crises and protracted disputes with labor unions shackled PAL once again.
Will Ang succeed in turning the ailing airline around this time?
Gauging from San Miguel’s acquisition moves in the past few years, Ang has expertise in taking advantage of synergies among the companies under his supervision. And PAL seems a perfect fit to the group. San Miguel owns Petron Corp., which can help the airline with its fuel requirements. (Aviation fuel makes up half of PAL’s operating costs.) PAL can also benefit from Petron’s network of fuel storage facilities like depots and logistics systems nationwide.
San Miguel has ventured into infrastructure and now owns the Caticlan airport, the gateway to the world-famous Boracay Island. There are plans to expand the airport so it can accommodate international flights and boost tourist traffic. As a San-Miguel-owned firm, PAL will benefit tremendously from this expansion, as it likewise will from San Miguel’s participation in the Aquino administration’s Public-Private Partnership program to redevelop the Ninoy Aquino International Airport in Pasay City and the Clark International Airport north of Manila.
With the San Miguel group having about 17,000 employees, it can only be expected that they, as well as its executives, will patronize PAL as they do other San Miguel products like beer. Add to this potential market the vast clientele of San Miguel who just might be enticed to use the airline as well.
And speaking of synergies, there is also a plan to integrate PAL’s popular Mabuhay Miles loyalty program with similar programs of San Miguel companies such as Petron. The case of Bank of Commerce is a testament to the benefits of such synergy. The erstwhile banking arm of San Miguel is expanding its network by simply putting ATMs in major Petron stations. Those gas stations already carry products from San Miguel’s traditional food and beverage units; some even offer broadband Internet subscriptions to another San Miguel subsidiary, Wi-Tribe Philippines. The list goes on, with San Miguel having interests in real estate, telecommunications, mining, power and infrastructure. What can this cross-selling scheme do for PAL but work wonders?
Ang is not exactly new to the airline industry. Few know it, but the CEO of the country’s biggest conglomerate is a licensed pilot. In an earlier conversation with members of Inquirer Business, Ang cited just one measure that could boost efficiency at the airline. “I want all PAL aircraft to have software that will monitor how well pilots fly the planes,” he said. This monitoring software will help determine how faithfully pilots follow prescribed power settings at different stages of a flight—much like moderating the pressure on a car’s accelerator, instead of constantly revving it up. “How well the pilots fly the plane and how efficient they operate it will have a direct bearing on their pay,” Ang said. “You can bet you’ll see improved profitability there.”
Yes, PAL faces sunny skies with the entry of a new investor—and not just an ordinary investor, but one that has displayed a particular acumen in making companies better, organizationally and financially.
The only sticky point that can be seen so far is the precarious labor-management relations that Ang will inherit once he takes over management of the airline. His people skills will definitely be put to the test in PAL. While it appears that the employees of the companies within the San Miguel group are satisfied with Ang’s brand of management, PAL’s case is an entirely different thing altogether. The other companies in the group are making huge profits, making it easy for Ang to cascade part of any windfall down to the ordinary workers. PAL, on the other hand, is losing money, big money. How Ang will deal with the airline’s labor unions will indeed be worth watching.

Miyerkules, Abril 11, 2012

Ang to take over as PAL president



By Mary Ann Ll. Reyes (The Philippine Star) Updated April 11, 2012 12:00 AM 




MANILA, Philippines - With San Miguel Corp. (SMC) taking over management control of flag carrier Philippine Airlines (PAL), the former is set to implement a number of changes aimed at putting the long-suffering airline back on its feet.
SMC president Ramon Ang has confirmed in a text message to The STAR that he is taking over as president of PAL. Business taipan Lucio Tan will remain as chairman of PAL.
Current PAL president Jaime Bautista will likely remain as a member of the board of PAL and parent PAL Holdings. Ang will also sit in the board of the two companies.
SMC and Tan last April 3 signed investment agreements that will result in the issuance of new shares to the former for a minority stake in PAL and low-cost partner Air Philippines Corp.(Air Phil).
The SMC group will shell out $500 million for the 49-percent stake in PAL and assumption of management control.
Under the agreement, Trustmark Holdings Corp. (Trustmark) and Zuma Holdings and Management Corp. (Zuma), the holding companies of PAL and Air Phil will issue new shares to San Miguel Equity Investments Inc., a wholly-owned subsidiary of SMC.
Trustmark and Zuma are majority owned by Tan.
Tan and Ramon Ang, San Miguel President and COO, said the new investment would allow the two airlines to strengthen operations and stay competitive with the implementation of PAL and Air Phil’s fleet modernization program.


Ang has said that SMC welcomes the opportunity to participate in the refleeting and modernization plans of the two airlines.
Earlier, SMC said that it was invited by Tan to participate and assist in the refleeting and modernization of PAL’s aircraft in preparation for the projected heavy influx of tourists in the coming years.
PAL is over 90 percent owned by PAL Holdings which in turn is controlled by Tan.


Source: http://www.philstar.com/Article.aspx?publicationSubCategoryId=66&articleId=795754

Martes, Abril 3, 2012

SMC acquires 49% of PAL Holdings


$500-M investment to give it management control


By: 

RAMON S. ANG. PHOTO FROM SANMIGUEL.COM.PH
San Miguel Corp. has firmed up a deal to acquire 49 percent of tycoon Lucio Tan’s PAL Holdings Inc. for about $500 million, thereby obtaining a significant foothold in national flag carrier Philippine Airlines.
Inquirer sources said SMC and the group of Lucio Tan agreed in principle for the former to buy into PAL’s parent company before the SMC’s exclusivity period lapsed in end-March.
An emergency board meeting was convened by PAL Holdings on Monday afternoon to discuss the deal with SMC, which had been in the works for the last three months.
The sources said that under the arrangement, SMC would buy 49 percent of PAL Holdings, a publicly listed entity. The structure of the deal is described by sources as complex but in the end, SMC’s entry in PAL’s parent company is seen giving it an effective 40-percent control of the airline. As expected, SMC will have management control of the airline.
SMC’s entry as Tan’s strategic partner was seen helping in the refleeting and modernization of the aircraft of Philippine Airlines in preparation for the projected heavy influx of tourists in the coming years, which will be beneficial to the Philippine tourism industry.
The purchase price was in line with PAL Holdings’ current valuation at the stock market. As of Monday, its shares were up 0.49 percent at P8.18 a share, giving it a market capitalization of P44.13 billion.
Industry sources said Tan and SMC president Ramon Ang had been in talks for the latter’s potential investment in PAL, initially meant as a personal venture for Ang, who is himself a pilot. However, SMC itself had become interested in the airline, leading to a memorandum of understanding signed last December that paved the way for a due diligence audit.
The airline business is seen in line with SMC’s diversification into infrastructure-building. San Miguel is investing about $300 million to modernize and set up new tourism amenities at the Godofredo P. Ramos airport in Caticlan, the main gateway to the world-famous Boracay Island. The conglomerate has also expressed interest to participate in the public bidding for the public-private partnership airport contracts.
Ang has been in on-and-off talks to invest in PAL over the last few years.
Ang’s business rival, First Pacific Co. Ltd. executive director Manuel V. Pangilinan, likewise expressed interest in PAL and while an alternative offer was kept as a back-up plan, industry sources said Tan himself and his brother Harry Tan had favored Ang’s proposal.
PAL earlier got an imprimatur from Malacañang to spin off its catering, ground handling and call-center reservations units, making it easier for the airline to attract investors. The spin-off plan is a measure intended to stabilize PAL’s finances due to the lingering effects of the global recession.

Miyerkules, Pebrero 1, 2012

San Miguel still in talks to buy PAL


Posted at 01/31/2012 4:37 PM | Updated as of 02/01/2012 9:55 AM

MANILA, Philippines - San Miguel Corp. (SMC) is continuing its negotiations to buy flag carrier Philippine Airlines (PAL).
In a mobile text message to ABS-CBN News, San Miguel president Ramon S. Ang said the company was "still in talks" to acquire PAL.  Ang was asked whether SMC has decided to buy PAL, extend the due diligence period or continue talks.
A separate source said that SMC was in "advanced" stage of negotiations for PAL. 
Last December, ABS-CBNnews.com reported SMC was in talks with PAL officials for "a possible investment in the company. SMC inked a memorandum of understanding with PAL to do "due diligence" work on the flag carrier. The due diligence was slated until January 31.
The same source said the due diligence was being finalized, adding that some PAL officials are likely to be retained after the takeover.
PAL did not immediately reply to a request for its comment.
San Miguel earlier said PAL's owner Lucio Tan sought its help in its refleeting program.
"We confirm that the company was invited by Mr. Lucio Tan, the controlling shareholder of PAL Holdings Inc to participate and assist in the refleeting and modernization of the aircraft of Philippine Airlines in preparation for the projected heavy influx of tourists in the coming years," San Miguel said last December.
A few weeks ago, Tan further fueled speculation saying the airline was "for sale" at the right price. However, PAL officials said Tan's statement on sale was merely rhetorical.
The airline business is in line with San Miguel’s diversification into infrastructure-building. San Miguel is investing about $300 million to modernize the Godofredo P. Ramos airport in Caticlan, the gateway to the world-famous Boracay. - Reports from Coco Alcuaz, ANC; and Ira Pedrasa, ABS-CBNnews.com

Lunes, Enero 30, 2012

MVP mum on PAL buy-in talks


By: 



MANILA, Philippines—Business executive Manuel V. Pangilinan remains mum on talks that he and a rival group are in to acquire the nation’s flag carrier, Philippine Airlines (PAL).
In a recent chance interview, the Philippine Long Distance Telephone Co. (PLDT) chairman neither confirmed nor denied that he was in discussions with any group for a majority stake in the airline.
“I’ve said all I need to say on the matter,” Pangilinan told reporters.
Aside from Pangilinan, the only other group said to be eyeing PAL was diversified conglomerate San MiguelCorp.
Earlier this month, PAL chairman Lucio Tan, one of the country’s wealthiest individuals, said he was willing to sell his majority stake in the company “for the right price.”
Tan was also quoted to have said that both Pangilinan and SMC president Ramon S. Ang were his “friends.”
The company’s management, however, later clarified that Tan was merely making a rhetorical remark on the possibility of letting go the financially troubled carrier.
In a previous disclosure to the Philippine Stock Exchange (PSE), San Miguel confirmed that it had been invited to participate in the “refleeting” of PAL’s fleet of planes, although officials were mum on whether this would involve the infusion of fresh equity resulting in a change in control.
If Pangilinan were to secure a controlling stake in PAL, industry watchers say this may prove to be a difficult situation for the group since the Gokongwei family that owns the airline’s chief rival, Cebu Pacific, also owns a substantial stake in PLDT.
PAL, which used to monopolize in the country’s air travel, has struggled to keep up with changing industry dynamics that were a result of the industry’s liberalization instituted by the Ramos administration in the 1990s.
Because of its “full service” business model, PAL has been unable to match the low ticket prices offered by budget carriers like Cebu Pacific.
Due to soaring fuel prices, PAL reported a $39-million net loss at the end of September 2011, the end of the first half of the airline’s April to March fiscal year. This was a reversal from the $26.7-million profit the airline booked a year earlier.

Linggo, Enero 29, 2012

Prosecution: Corona got perks from PAL; Defense: why subpoena media?


29-Jan-12, 10:04 AM | Lira Dalangin-Fernandez and Karl John C. Reyes, InterAksyon.com



The prosecution said Corona received special privileges from the management of the Philippine Airlines while cases against the country’s flag carrier were pending before the high court.MANILA, Philippines - (UPDATE: 5:33 PM) The prosecution and defense in the impeachment trial of Chief Justice Renato Corona traded accusations at the weekend, with the prosecution alleging he got privileges from PAL while the airline's case was pending, and the defense decrying the desperation of the prosecution in its bid to subpoena journalists and SC justices.
Iloilo Rep. Niel Tupas Jr., the head of the panel, said the prosecution is now looking at the travel records of Corona and his wife, and will present evidence and witnesses before the court.
Article III of the eight charges accuses Corona of culpable violation of the Constitution and betrayal of public trust for his “failure to meet and observe the stringent standards of the Constitution that a member of the judiciary must be a person of proven competence, integrity, probity, and independence in allowing the Supreme Court to act on mere letters filed by a counsel which caused the issuance of flip-flopping decisions in final and executory cases,” among others.
Prosecutors have cited a Supreme Court resolution recalling its final decision on the illegal retrenchment case filed by the Flight Attendants and Stewards Association of the Philippines (FASAP) against PAL by acting on a mere letter from the carrier’s lawyer Estelito Mendoza.
In connection with this case, five witnesses will be presented, including representatives from the Bureau of Immigration (BI), PAL, Supreme Court, Prestige Travel Agency, and Securities and Exchange Commission (SEC).
The BI representative will produce and testify on the travel records of Corona and wife, Cristina, “to show that he accepted special privileges from PAL management while PAL cases are pending before the Supreme Court,” according to the prosecutors in a statement.
The PAL representative, they said, will testify on the travel dates of the Corona couple via PAL and the corresponding seats occupied.
They will also call to the witness stand an employee of the Supreme Court who handles the official travels of the magistrates to testify on the chief justice’s trips via PAL and the type of airline tickets he purchased.
Prosecutors noted that the Supreme Court often tapped the services of Prestige Travel Agency, which according to SEC records, is owned by the family of lawyer Estelito Mendoza. 
Defense: why summon journalists, SC justices?
This developed as the defense panel of Chief Justice Renato Corona decried the prosecution plan to summon media workers as witnesses, saying that while the accused has lived with the “unfavorable” media coverage, summoning journalists to testify in the impeachment trial is another matter.
Defense lawyers also assailed the prosecution bid to have associate justices of the Supreme Court testify against Corona.
“Media has not always been for us but we are fine with that and we learn as we go along on how best we can bring our messages to the people so they can understand the Chief Justice,” Defense Spokesman Atty. Rico Quicho said in reaction to the prosecution’s request for the impeachment court to subpoena  100 witnesses.   
The “media has a role to play in a democracy, no matter how the Defense feels about it and even if the Defense has been on the short end of it in getting favorable coverage.” But, he added, “we take exception to the proposed plan of the Prosecution [to make journalists testify].” 
Media has three basic roles: to inform, educate and entertain and “even if some have gone further, they have a unique role,” said Defense panel spokesperson Atty. Karen Jimeno. 
The “Prosecution has pierced the veil of confidentiality with the ITR, let us not drag the media and place it on the witness stand. The Media is not on trial here. Prove your case by doing your work in research and litigation,” Jimeno stressed. 
The Defense also cautioned against the plan to subpoena Justices of the Supreme Court. 
“Is the Prosecution saying they need the other Justices to rat against the Chief Justice and against each other on how they voted on a particular case?” asked Quicho. 
Jimeno explained that such plan would again pierce the veil of the time-honored confidentiality of the Court in the disposition of cases.  
The best proof is still the decision itself and that it why there are dissenting and concurring portions of any decision, she added.

Miyerkules, Enero 25, 2012

PALEA testifies vs Philippine gov’t


Posted on January 25, 2012 11:31:52 PM

THE PHILIPPINE Airlines Employees Association (PALEA) testified against the national government at a hearing in Washington in a labor issue which could jeopardize the preferential tariff rates enjoyed by Filipino exporters through a US trade development scheme.

The testimony came as the United States Trade Representative (USTR) office performed on Tuesday a routine review of the Philippines’ status as a beneficiary of the US Generalized System of Preferences (GSP), the labor group said in a statement yesterday.
Manila, for its part, sent a high-level delegation to Washington DC to respond to the labor rights case which was first filed against the Philippines in 2007.
“PALEA presents a significant case in reviewing whether or not the Philippines has taken or is taking steps to afford workers their internationally recognized rights. We submit that the Philippine government has abused its power to assume jurisdiction of strikes thereby curtailing workers’ rights to freely organize and bargain collectively,” PALEA president Gerry Rivera said at the overseas hearing, as quoted in the labor group’s statement yesterday.
“PALEA was not allowed to strike on two crucial occasions to protest the mass termination of some 2,600 workers and yet Philippine Airlines (PAL) was permitted to proceed with the layoff despite a pending case at the Court of Appeals,” he continued.
The GSP, which US President Barack Obama renewed in November, grants eligible developing and least developed economies affordable access to the American market in a bid to stimulate domestic productivity among America’s partner countries.
Over 4,800 products from 129 beneficiary countries can enter the US duty-free through the preferential scheme.
The trade assistance, however, requires such countries to take effective steps toward upgrading and implementing its labor standards. Otherwise, developing economies stand to lose preferential treatment for their products, as in the case of Belarus which was suspended in 2000 for failing to protect workers’ rights to association and collective bargaining. -- Eliza J. Diaz