Tycoon Lucio Tan on Monday officially reclaimed management control of flag carrier Philippine Airlines after executing the buyout of the 49-percent stake held by conglomerate San Miguel Corp.
Banking sources said the Tan group’s creditors had already disbursed last Friday the funds borrowed by the group to buy back SMC’s interest and regain control of the now profitable airline.
On Monday, PAL’s new general manager Jaime Bautista (the former president before SMC’s entry) said they were optimistic for the airline’s future but reminded workers that issues plaguing the airline industry—tense competition and volatile fuel prices—remained key challenges.
“The first step is to go back and review where we stand and plot a new direction,” Bautista said in his speech. “We will also re-evaluate existing programs without reinventing the wheel.”
Bautista said part of the plan involved determining the best use of PAL’s existing fleet. He said they were also looking at the “most prudent” choices in terms of mapping out new routes.
Tan, in his message to workers, continuously highlighted how the airline was “special” to him.
“PAL is more than an airline company for me. It goes beyond investing—it is like family,” Tan said.
“Whatever life’s problems, this is a place I can always return to and feel safe, secured and loved. Indeed, this is the reason why I decided to regain full ownership of PAL, because I love PAL.”
A memorandum was released by each department in PAL to announce Monday’s “meet and greet” with Tan —who had remained PAL chair throughout SMC’s stint at the helm —at the Philippine National Bank complex in Pasay City.
Employees were requested to wear red, suggesting a festive mood to mark the consolidation of control over PAL under the Tan group after sealing a $1-billion buyout deal.
The Tan group raised around $780 million from a bridge financing from four big local banks, $460 million of which will come from banks led by the family of fellow tycoon Henry Sy, Banco de Oro Unibank and China Banking Corp. while the remainder was funded by PNB and Asia United Bank.
It was earlier reported that BDO accepted shares in PNB and holding firm LT Group Inc. as underlying collateral for its lending to the Tan group, while China Bank and AUB got LTG shares.
The Tan group is widely expected to bring in a new strategic partner in PAL.
For its part, SMC is bowing out of PAL on the heels of the flag carrier’s return to profitability amid a difficult business climate that has forced the airline into the red for many years.
During its two-year stewardship, SMC implemented a three-pronged strategy of fleet modernization, network expansion and service innovation to bring Asia’s first carrier back to profitability.