SMC confirms talks with Japan’s ANA

Conglomerate San Miguel Corp. on Monday confirmed that it had entered into discussions with Tokyo-based All Nippon Airways (ANA) for a prospective partnership in 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.”

SMC issued the disclosure in reaction to an Inquirer report that SMC was in talks with foreign airlines on a prospective partnership in PAL, including ANA.  But, in the same disclosure, SMC said the Dubai-based Emirates had not approached the company.

ANA is Japan’s biggest airline in terms of passenger volume and one of the largest in the region.

SMC has existing partnership arrangements with Japanese firms in other businesses, such as with Kirin group in San Miguel Brewery and Nihon Yamamura Glass Co. Ltd. in packaging.

Ramon Ang, president of both SMC and PAL, confirmed that PAL would welcome a strategic investor and that a partnership could happen “within this year.”

In a separate interview with CNBC, Ang had said PAL would need about $1 billion in fresh investment to become a very competitive regional airline.

Tycoon Lucio Tan has 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 said it was also open to getting another strategic partner in PAL which, Ang said, could return to profitability by next year.

A foreign airline, however, can buy up to only 40 percent of PAL given the existing constitutional restriction on foreign ownership in key industries.