PAL eyes follow-on offer to finance expansion

The operator of flag carrier Philippine Airlines (PAL) is studying the sale of shares to raise funds for expansion and comply with upcoming regulations requiring publicly traded firms to widen their public ownership.

PAL president Jaime Bautista said there were internal discussions on a potential follow-on share offer, also called a re-IPO (initial public offering), and that several investment banks had made pitches to PAL Holdings, whose public float stood at the current minimum of 10 percent.

“We can go up to what is required by the SEC (Securities and Exchange Commission),” Bautista told reporters. The SEC earlier sought to implement a plan to increase the minimum public ownership level to 20 percent from 10 percent starting 2018. Poor market conditions last year prompted the SEC to reconsider the timing and the 20-percent minimum float was only imposed on newly listed firms.

Bautista said PAL Holdings, which has a market value of about P130 billion, was preparing for the possible implementation of that requirement within this year.

Funds from a share sale would help PAL grow as it acquires new planes and targets new destinations. The expansion of its network is underway as Japan’s ANA Holdings is set to close a deal to acquire a 9.5-percent stake in PAL Holdings for $95 million.

“We are hoping by early March this will be a finalized transaction,” Bautista said. PAL has already started to increase flights to Japan, a popular destination for Filipino tourists.

He said Cebu-to-Nagoya flights would be increased from four times a week to daily operations. PAL is also deploying larger planes in several Japanese routes to increase capacity, Bautista said.

Overall, PAL sees stronger demand this year as it targets to fly 17 million passengers against roughly 16 million in 2018.

To lure new passengers, PAL announced its biggest ever seat sale to celebrate its 78th anniversary. The promo will involve more than two million seats, 40 percent of which will be allocated to its international destinations. The booking period will run from March 1-10, while the travel period will run from March 16 to Dec. 31 this year.