PAL eyes stake in Cayman Islands airline

SMC may upgrade islands’ infrastructure

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Flag carrier Philippine Airlines is in negotiations to acquire as much as a 50-percent equity in the national airline of the Cayman Islands in what could be the long-awaited solution to the downgraded aviation safety status that has hounded local carriers since 2008.

 

PAL president Ramon Ang on Tuesday confirmed that both parties were in the process of working out a deal that could see both airlines coming to a mutually beneficial arrangement.

 

“Yes, we are currently in talks with Cayman Airways and the Cayman Islands government for a number of investment opportunities,” he said in a text message to the Philippine Daily Inquirer.

 

His statement comes after the government of Cayman Islands disclosed the deal, some details of which were published late Tuesday in the Caymanian Compass publication.

 

According to the publication, the Cayman Islands government was evaluating a proposal put forward by PAL—and one of its significant stakeholders, San Miguel Corp.—for a 50-percent stake in the small airline.

 

The scheme will call for Cayman Airways to issue new preferred shares that San Miguel will subscribe to. The fresh capital to be generated from the equity infusion will be used by the Cayman carrier to acquire new aircraft, which will then be rented out to PAL under a so-called “wet lease” agreement.

 

Under a wet lease deal, the aircraft are registered and domiciled in the Cayman Islands and flown, operated and maintained completely by Cayman Airways.

 

Cayman Airways’ Category 1 status with the US Federal Aviation Administration will allow the airline to mount additional flights between the Philippines and the US mainland.

 

The Cayman airline operates only four Boeing 737s and two De Havilland Twin Otter turboprops.

 

PAL, on the other hand, is prohibited from increasing its number of flights to the US mainland or replacing planes currently used for the route since the Philippines is under category 2 status with the FAA due to weaknesses in the local aviation regulator.

 

A statement released Tuesday by the Cayman Islands’ Ministry of Finance, Tourism and Development said its government was also in talks with San Miguel for the conglomerate to upgrade the infrastructure on the resort island chain, including modernizing one of its biggest airports.

 

“Cayman Airways is currently in discussions with Philippine Airlines to ascertain if there are ways for the two airlines to work together,” the statement said. “The exploration of this potential collaboration is covering a variety of areas, but includes reviewing the ability to code share, to provide aircraft operations and includes other strategic areas.”

 

“San Miguel Corp. is a multibillion-dollar company and has expressed great interest in investing in the Cayman Islands,” the statement added.

 

“We welcome this exploration of potential investment and trust that they will ultimately choose to invest in these islands. With their controlling ownership of PAL, there also appears to be some potential opportunities for Cayman Airways and the Cayman aviation sector, in general, to benefit from an investment by San Miguel Corp.”

 

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  • Zuki Shin

    San Miguel is now trying to evade South America.
    Jollibee in Asia, SM in China, Penshoppe in Asia, URC in southeast asia, what else?

    • aclaps

      ICTSI everywhere else. The only true Philippine multinational.

      ICTSI is a leading port management company involved in the operations and development of 28 marine terminals and port projects in 19 countries worldwide. The company was among the first international terminal operators to take its expertise overseas.

      Manila International Container Terminal (MICT)
      Subic Bay International Terminal Corp. (SBITC)
      Bauan Terminal, Batangas, Philippines
      Makar Wharf, General Santos City
      Sasa Wharf, Port of Davao
      Mindanao Container Terminal, Misamis Oriental
      Suape Container Terminal, Pernambuco, Brazil
      Baltic Container Terminal, Gdynia, Poland
      Naha International Container Terminal, Okinawa, Japan
      Madagascar International Container Terminal, Toamasina, Madagascar
      Makassar Container Terminal, South Sulawesi, Indonesia
      Tartous Container Terminal, Tartous, Syria
      Yantai Rising Dragon International Container Terminal, Shandong Province, China
      Container & Multipurpose Terminals
      Batumi International Container Terminal, Adjara, Georgia
      Multi-User Container Terminal, Buenaventura, Colombia
      Muara Container Terminal, Negara, Brunei Darussalam
      Puerto de La Plata, Buenos Aires, Argentina
      Port of Portland, Portland, Oregon, United States of America
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      More coming up:

      Nigeria
      Pakistan
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  • http://twitter.com/CasesKarlo karlo cases arellano

    Expansion.. Nice

    Philippine companies now are getting their stakes at other countries

  • http://pulse.yahoo.com/_VYOIJWB3T5AQZVG4JRRQHCU2BI John

    Please dont use PAL ( Phillipine Airlines ) better change that to LUCIANG AIRLINES, MAGNOLIA AIRLINES, PILSEN AIRLINES.

    What do you think of CAYMAN huge market? It is only a haven to TAX EVADERS, DRUG MONEY ,and MONEY LAUNDERERS then you like to service those good people for the sake of funding PAL operation.

    Dont be deceived friends, kayo rin just by simple icing on the cake okay na sa inyo but behind the scene pahamak sa bayan.

    Palitan na yan ng pangalan to LUCIANG AIRLINES, Lucio Tan & Ramon Ang.

    • http://profile.yahoo.com/FRDDCA3DHAXOI62QJETTXG66TU Margie O

      I am a Filipino professional working in the Cayman Islands and I think you need to have a better understanding of the place before you make such comments .  This Island is one of the most peaceful, beatiful place on earth.  At kahit san ka pumunta dito sa Isla makikita mo ang ngiti ng kababayan mo.

  • lufthansa49

    New or additional services will be permitted if operated using aircraft wet-leased from a duly authorized and properly supervised U.S. carrier or a foreign air carrier from a category 1 country that is authorized to serve the United States using its own aircraft.

  • GaggerAlert

    Again, Ramon Ang never ceases to amaze me with his well thought out business plan. 

    Way to go! :)

    At least we could bypass the effing status of our country to fly to the US. The is how it suppose to be. If the government wouldn’t do anything, the citizens should take initiative, and hope that these officials would soon follow.

  • virgo8888

    very smart thing to do for pal to counter this  hopeless noynoying administration

  • Echuserang_Froglet

    mabuhay ang philippine airlines. ang tunay na pag asa ng bayan!

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