SMC to invest $500M in plane leasing firm
MANILA, Philippines—Conglomerate San Miguel Corp. plans to invest $500 million in an aircraft-leasing company to support the expansion of Philippine Airlines, SMC president Ramon S. Ang said on Tuesday.
Ang said the investment would be a followup to the initial $500 million that the company had put in the airline, allowing it to own roughly half of the flag carrier. Philippine Airlines’ second major shareholder is the group of tycoon Lucio Tan, who earlier said he was selling his remaining 51-percent stake although a deal has yet to be finalized.
“We intend to come up with another $500-million equity for the aircraft-leasing company that will be 100-percent owned by PAL,” Ang said at the sidelines of the relaunching of the airline’s Manila-to-London route.
Set for Nov. 4, the transcontinental flight will mark PAL’s return to Europe after 15 years of absence. Ang said PAL will fly five times a week to London Heathrow Airport, the main air gateway to the United Kingdom.
Ang also said that PAL was ordering more planes than previously announced.
He said the airline was looking to acquire 71 new aircraft—21 long-range Airbus A330s, 44 medium-range Airbus A321s and six long-range Airbus A340s—over the next five years. The company earlier said it would acquire 65 Airbus aircraft, valued at about $9.5 billion, but that figure did not include the A340s.
After London, Ang said they plan to mount more flights to European cities like Paris, Rome and Italy within the year. Also on the pipeline will be expanded flights to the United States in the event the Philippines finally obtains the coveted upgrade to Category 1 from the US Federal Aviation Administration.
Competition is expected to be tough as carriers based in the Middle East are also expanding aggressively.
“We are expecting them to react. In fact, one lowered the price of their tickets already. But we foresaw that and we are definitely here to stay and we will compete with them,” Ang said.