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Other investors keen on PAL minority stake

Airline holding firm’s stocks up 42% as players snap up shares
/ 05:22 AM January 24, 2019

Investors were unstoppable on Wednesday even as the management of flag carrier Philippine Airlines was mum on talks between operator PAL Holdings and Japan’s ANA Holdings.

Shares of PAL Holdings surged as much as 44 percent after the Inquirer reported that ANA Holdings, which operates All Nippon Airways, was close to finalizing a deal to acquire a minority stake in PAL that had long been on the selling block.

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PAL Holdings ended the session at P12.74 apiece, up 41.6 percent.

“For airlines, the entry of a new investor is always a welcome development,” Astro del Castillo, First Grade Finance Inc. managing director, said on Wednesday.

PAL Holdings clarified in a stock exchange filing that it had yet to seal any agreement with an investor.

PAL president Jaime Bautista also told reporters in a brief talk on Wednesday that “we cannot confirm or deny” reports on a possible deal with ANA, operator of Japan’s biggest airline.

“We aren’t allowed, we have a confidentiality agreement,” Bautista said.

Bautista said there were also unresolved issues with respect to the entry of a strategic partner while suggesting that PAL was in talks with other parties.

“We have to thresh out and clear all issues that need to be clarified because this will be a long-term relationship,” he added.

Bautista said having a large strategic partner was nevertheless beneficial for PAL and its goals to expand globally and to boost profitability.

“Airline margins now are very low so for an airline to be profitable, you really need to reduce costs,” Bautista said. He explained that PAL could tap its partner and enter into joint purchasing agreements to win more favorable terms.

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PAL posted a net loss of P3.4 billion in the nine months through September last year as oil prices, a major operating expense, surged. Passenger revenues during the period hit P96.6 billion, up almost 17 percent.

Bautista said in a briefing early this month that the return of a fuel surcharge mechanism late last year would help it recover fuel expenses.

Apart from improving PAL’s bottom line, Bautista said a strategic partner would also help it reach new markets and expertise. He said on Wednesday that a deal could still be reached within the first half of 2019.

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TAGS: Japan’s ANA Holdings, PAL Holdings, Philippine Airlines
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