SMC confirms talks with ANA on PAL

SMC president Ramon S. Ang. AP FILE PHOTO

MANILA, Philippines–Conglomerate San Miguel Corp. confirmed on Monday that it has entered into discussions with Tokyo-based All Nippon Airways (ANA) on a prospective partnership in flag carrier Philippine Airlines.

In a disclosure to the Philippine Stock Exchange, SMC said “there have been preliminary discussions with All Nippon Airways on Philippine Airlines Inc.”  The same disclosure said, however, that it Dubai-based Emirates had not approached the company.

SMC was reacting to an Inquirer report saying SMC was in talks with foreign airlines on a prospective partnership in PAL.

SMC president Ramon Ang, who is also president of PAL, had said PAL would welcome a strategic investor and that a partnership could happen “within this year.”

Tycoon Lucio Tan earlier put his 51-percent stake in PAL on the block but as the strategic partner, SMC has the option to take up the block and consolidate its interest in the flag carrier. However, SMC is also open to getting another strategic partner in PAL, which Ang said could return to profitability as early as next year.

A prospective tie-up with ANA is seen as part of PAL’s aspiration to become a regional airline as early as next year.
ANA is Japan’s biggest airline in terms of passenger volume and one of the largest in the region.

SMC has existing partnerships with Japanese firms, notably with Kirin group in crown jewel San Miguel Brewery and Nihon Yamamura Glass Co. Ltd. in packaging.

A foreign airline, however, can buy up to only 40 percent of PAL given the existing constitutional restriction on foreign ownership in key industries.
In an interview with CNBC, Ang had said PAL would need to $1 billion in fresh investment to become a very competitive regional airline.