Philippine Airlines moved closer to becoming a global player as it won yesterday a long-sought investment deal from a foreign group.
In a joint statement, Japan’s ANA Holdings, owner of that country’s largest carrier, All Nippon Airways (ANA), announced it would take a 9.5-percent stake in PAL Holdings for $95 million (P4.98 billion). The announcement confirms a report published by the Inquirer last week.
The stake will give ANA Holdings a seat on the board of PAL Holdings, which is listed on the Philippine Stock Exchange.
PAL Holdings is controlled by taipan Lucio Tan, who considers PAL among his most cherished businesses but has been keen to tap foreign partners as he did with his cigarette and beer units.
“This purchase underscores ANA Holdings’ belief in the dynamism of the Asian region and the great potential of the Philippines’ multiawarded flag carrier and its confidence that the Philippine air travel market will continue to serve as an economic leader in the Asean region,” PAL said in the statement.
It said the final closing would be subject to certain conditions. Shares of PAL Holdings, which rose by as much as 25 percent on Tuesday, ended the session up by 7 percent to P14 apiece.
ANA Holdings’ investment comes as PAL pursues what it called a “ full-scale expansion program.” This involves increasing its fleet to about 100 aircraft by 2021 and opening more international destinations for leisure and business travelers as well as the 10 percent of Filipinos living and working overseas.
Its most public goal is to become a five-star carrier by 2020. Under PAL president Jaime Bautista, who outlined the airline’s long-term strategy in 2016, the flag carrier clinched a four-star rating from Skytrax last year.
“We are honored and excited that a premier airline group such as ANA Holdings has decided to purchase shares in PAL Holdings,” Bautista said in the statement.
“The Philippines and Japan have a long-standing relationship with complementary strengths. This week, in fact, we commemorate the 70th year of Philippine Airlines’ service to Japan, dating back to the launch of our first Manila-Tokyo flight on Jan. 26, 1949,” he said.
ANA Holdings had been in previous talks with PAL in 2014, when PAL’s management team was led by businessman Ramon Ang. No deal was reached, however, and both airlines settled on a codeshare agreement.
ANA Holdings president and CEO Shinya Katanozaka, in the same statement, called Asia “a key growth market”.
“We believe Philippine Airlines is in an excellent operational position to capitalize on both the strong uptick in air traffic growth as well as the vibrant, expanding Philippine economy. We look forward to expanding our business relationship with Philippine Airlines so we can continue to serve our passengers even better,” Katanozaka said.
In its statement, PAL said it was aiming to grow to 80 destinations across four continents. Newly-launched and prospective international destinations this year included locations in Cambodia, Vietnam, India, Israel and the United States.
PAL, which turns 78 this year, is considered Asia’s oldest carrier. In 1995, it was acquired by Tan, who held on to the business despite crippling labor strikes, economic downturns and competition from low cost carriers.
The search for a new investor began shortly after Tan bought back a sizeable minority stake in PAL Holdings from Ang-led San Miguel Corp. in 2014.
Since 2010, Tan has been partnering with foreign groups, notably with cigarette maker Philip Morris in 2010 and beer giant Heineken in 2016.
Jose Mari Lacson, ATR Asset Management head of research, said taking on credible foreign partners would help transfer the management load to professionals and make the business more aligned with future trends.