Latest Stories

Lucio Tan sells rest of PAL to SMC



Diversified conglomerate San Miguel Corp. has sealed a deal to acquire the entire holdings of tycoon Lucio Tan in flag carrier Philippine Airlines (PAL), the Inquirer learned on Friday.

According to a source from the Lucio Tan camp, the transaction involves the acquisition by San Miguel of 51 percent of the airline currently owned by the tobacco and beer magnate.

The deal is valued at $500 million and, once executed, would give San Miguel president Ramon Ang complete control over the board of the country’s largest airline.

In April 2012, San Miguel also paid $500 million for a 49-percent stake in PAL Holdings Inc., which controls the airline. Under that transaction, the conglomerate infused $500 million in equity into PAL and was also handed management control over it.

With the leverage provided by the additional equity, the airline has since embarked on an aggressive expansion of its route network and launched a $7-billion refleeting program involving the purchase of at least 54 long- and short-haul Airbus aircraft.

Ang did not reply to queries about the transaction.

He had earlier initiated programs to revitalize the airline, which had struggled financially since the mid-1990s due to a confluence of adverse factors, not the least of which was the advent of the low-cost carrier airline model that its rival, Cebu Pacific Airways, successfully adopted.

PAL was also affected by high operating costs carried over from its days as a government-owned enterprise, as well as soaring fuel costs—its single largest expense item, accounting for approximately half of its operating expenses.

The flag carrier was also affected by the decision of United States aviation regulators to downgrade the Philippines’ aviation industry to Category 2 status, thus preventing the airline from replacing on US mainland routes its older aircraft with new and more fuel-efficient jets.

Amid these challenges, Ang has worked on turning the airline around by acquiring newer aircraft that consume less fuel to replace its aging fleet, as well as flying to new destinations in the Asia-Pacific and Middle East.

PAL also recently paid $10 million for a 49-percent stake in a startup Cambodian airline.

Ang is confident that these changes—along with the hoped-for upgrade by US and European regulators of the country’s aviation status—would help the airline return to profitability next year.

“We will make money in 2014,” he said earlier.

First posted 9:25 pm | Friday, June 7th, 2013

Follow Us

Follow us on Facebook Follow on Twitter Follow on Twitter

Recent Stories:

Complete stories on our Digital Edition newsstand for tablets, netbooks and mobile phones; 14-issue free trial. About to step out? Get breaking alerts on your mobile.phone. Text ON INQ BREAKING to 4467, for Globe, Smart and Sun subscribers in the Philippines.

Tags: acquisition , beer magnate , Lucio Tan , PAL , Philippine Airlines , Ramon Ang , San Miguel Corp. , San Miguel Corporation , SMC , tobacco

  • tanga_hanga_ni_abnoy

    magiging Pal Pilsen na daw pangalan nya

Copyright © 2014, .
To subscribe to the Philippine Daily Inquirer newspaper in the Philippines, call +63 2 896-6000 for Metro Manila and Metro Cebu or email your subscription request here.
Factual errors? Contact the Philippine Daily Inquirer's day desk. Believe this article violates journalistic ethics? Contact the Inquirer's Reader's Advocate. Or write The Readers' Advocate:
c/o Philippine Daily Inquirer Chino Roces Avenue corner Yague and Mascardo Streets, Makati City, Metro Manila, Philippines Or fax nos. +63 2 8974793 to 94


  • Romblon mining site collapses; 3 killed
  • South Korea says 295 missing in ferry disaster
  • OFW who returned home from UAE tests positive for MERS-CoV – DOH chief
  • QC cops bear crosses as penance for demerits
  • Kim Henares needs a reprimand, says Cayetano
  • Sports

  • China, Taiwan rout foes for 3rd, 5th places in Asian Club volleyball
  • Ginebra’s new import Freeman arrives, makes PBA return vs ROS
  • Fielder ends HR drought, Rangers beat Mariners 5-0
  • Power Pinoys salvage 7th place in Asian men’s volley club championship
  • Knicks prevent Nets from clinching fifth seed
  • Lifestyle

  • Are your favorite malls open this Holy Week break?
  • Celebrate Easter Sunday at Buddha-Bar Manila
  • Moriones feast: A slow, steady transformation
  • Weaving ‘palaspas’ a tradition kept alive in Tayabas City
  • Finalists announced for best translated books
  • Entertainment

  • Mommy Dionisia Pacquiao’s greatest hits
  • Deniece Cornejo posts bail—report
  • Miley Cyrus hospitalized, cancels US concert
  • Otaku Summer Jam 2014: Summer’s hottest J-rock/Cosplay event
  • 2NE1 returns to Manila with “All Or Nothing” Tour
  • Business

  • I-Remit teams up with Lakhoo for remittances from Oman
  • Megawide nets P1.4 B in 2013
  • Longer TRO sought on rate hike
  • Make a stylish statement with the all-new Yaris
  • Hearing set in Olarte case
  • Technology

  • Smart phone apps and sites perfect for the Holy Week
  • Tech company: Change passwords or suffer ‘Heartbleed’
  • Filling the digital talent gap
  • SSS to shut down website for Holy Week
  • Another reason to quit social media this Holy Week: your safety
  • Opinion

  • We may never know
  • Couple of things
  • Mommy D’s magic
  • Stop bizarre and bloody Good Friday rituals
  • Holy Week taboos
  • Global Nation

  • Visa-free travel to Japan could boost tourism
  • 2 PCG men ordered arrested over Balintang Channel shooting
  • US Embassy closed on Holy Thursday, Good Friday
  • Relief worker draws inspiration from helping Yolanda victims
  • Philippines says peace pact should hold despite clashes
  • Marketplace