Biz Buzz: PAL shopping spree
Barring any last-minute hitches, it looks like Philippine Airlines is set to announce a deal to acquire six Airbus A350 aircraft to augment its long-range fleet.
Biz Buzz learned that the purchase agreement would likely be announced by PAL and the European plane maker during next week’s Singapore Air Show in the island city.
We know that the flag carrier had, for several months now, been evaluating the A350 and its rival from Boeing, the 787 “Dreamliner.” The contest was tight, with both advanced aircraft being touted by their manufacturers.
But in the end, word on the street is that it was no less than PAL owner Lucio Tan who made the final decision. Our source said the tycoon was impressed by the A350’s flight performance, especially the fact that the inside of the cabin is so quiet even when the jet is climbing at full power.
The aircraft will be used for PAL’s long-range routes, including new ones that are likely to be opened between Manila and Paris, and Manila and Frankfurt, we were told.
The A350s—which runs on only two engines—will also replace the last of PAL’s previous-generation Airbus A340s whose four engines are gas guzzlers.
We understand that PAL specifically wants the A350-900 model which is the long-range variant that competes directly with the Boeing 787 and the older Boeing 777. The A350-900 has a sticker price of $308 million per aircraft, but this is often subjected to a secret discount rate and favorable financing terms courtesy of a European export-import bank.
If history is any indication, PAL may also execute a “sale-and-leaseback” strategy for the six new Airbus aircraft, which means it may immediately sell them to a third party and lease them back making regular rental amortization (a strategy that may or may not pay off depending on one’s reading of the volatile aviation market).
PAL is also expected to benefit from the sharp drop in petroleum prices, given that fuel costs typically account for one half of an airline’s operating expenses. Expect these benefits to be reflected in PAL’s income statement for the previous fiscal year, barring any last minute surprises, of course.
All these point to an auspicious Year of the Monkey for the people at PAL, especially after a minor incident just before the Lunar New Year that saw one of its precious long-haul Boeing 777s (flying from New York to Manila) accidentally hitting a passenger boarding bridge during a stopover in Vancouver. We hear there was minor damage to the aircraft and the airbridge and the plane had to be towed to another part of the terminal where passengers were offloaded (and the rest of the flight was cancelled). Whew. Daxim L. Lucas
Galleon museum at MOA
THE SM group’s Manila-Acapulco Galleon Museum—which will have as its centerpiece an authenticated replica of a galleon ship used during the 17th century global trade—will open its doors at the Mall of Asia near the iMax theater fronting Manila Bay by the third quarter of this year.
Edgar Tejerero, president of SM Lifestyle Entertainment Inc., said this project (estimated to cost P350 million to P400 million—is one of the group’s exciting new ventures for 2016. The galleon has an estimated size of around 60×65 meters.
“You can get onboard and feel it,” he said. However, the mast—originally at 72 meters—had to be shortened to take into consideration the height of the MOA building.
The upcoming museum aims to give visitors a detailed history of the 250-year-old globalized trade where the Philippines and Mexico played major roles and their extensive influence on today’s trade, commerce, banking, travel and cultural exchange. The dome will showcase the true-to-life process of building a galleon, while exhibiting porcelain, gold, and other goods traded during the Spanish era.
The SM group is working with a foundation chaired by former Senator Edgardo Angara and the Mexican Embassy to build what is expected to be an awesome collection of Spanish-era artifacts.
To recall, SM Prime Holdings president Hans Sy himself flew to Mexico last year to talk to Mexican magnate Carlos Slim Helu (the second wealthiest man on the planet next to Bill Gates) for a potential collaboration on this galleon museum. Doris Dumlao-Abadilla
Looking for the next big thing
THERE’S no place like Silicon Valley but globally disruptive technologies can still come from anywhere—from Stanford dormitories to inconspicuous garages in Jakarta.
That, at least, is the key takeaway from Allen Taylor of Endeavor Catalyst and Robert Coneybeer, former rocket scientist and managing director of Shasta Ventures.
The two decided to stop over in Manila and report Valley trends with the help of the Endeavor local office.
Endeavor is a non-profit that supports “high-impact” entrepreneurs, which in 2014 alone collectively generated about $7.6 billion in revenues. The local arm, led by Manny Ayala, just last year is in the process of screening promising Filipino entrepreneurs who are looking to scale. The first to get in, of course, was Nix Nolledo of Xurpas.
While Coneybeer manages a fund that invests solely in Silicon Valley companies, Taylor holds a smaller check at $35 million that goes mostly to emerging markets, except China and India or those with a sizable number of local funders.
Make no mistake, Endeavor Catalyst, which functions as Endeavor’s co-investment arm, does not really work with startups and instead focuses on entrepreneurs within its ecosystem. Some of these include a company that launches nano-satellites called Satellogic based out of Argentina to a Turkish food delivery business called Yemeksepeti now valued at $589 million.
While some would sit around gasping at the valuations and just waiting for a doomsday tech bubble, some optimistic Valley guys are still making the rounds, putting money where it could grow. All in all, those who were good enough to get past the Endeavor screening process have posted a 65-percent compounded average growth rate in the first two years post engagement and generated $5.2 billion in revenues. Not bad.
Who knows? Maybe the next tech winner will be a Filipino. Daxim L. Lucas
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