Conglomerate San Miguel Corp. is scouting for more acquisition opportunities, including a possible investment in a regional airline and the broadcasting industry, alongside plans to double group-wide sales to P1 trillion over the “near term.”
SMC president Ramon Ang on Thursday told the company’s stockholders during their annual meeting that a cost structure for a budget carrier, “but with comfortable seats like a full-service airline,” is being drawn up.
SMC recently acquired control of Philippine Airlines and Air Philippines.
“Also there’s some opportunity for us to forever solve the problem of Category 2 by investing in a regional airline,” Ang said. “At the moment, there’s [an] opportunity for PAL to acquire some other company in the region for us to have good synergy in operating the AOC [air operator’s certificate] of airlines going to the United States and Europe.”
AOC refers to the permission granted under civil aviation rules to conduct commercial activities, while category 2 refers to the Philippines’ current status after the US Federal Aviation Administration decided to downgrade the country from category 1 a few years ago. This decision prevented PAL from increasing flights to the United States and its territories.
“With the leadership of our president and chief operating officer Ramon Ang and new management directives in place, we expect to turn around Asia’s first airline and be in the black in two years,” SMC chairman Eduardo “Danding” Cojuangco Jr. said.
PAL will also be consolidated into SMC’s books in two years’ time, the officials said. Ang added that talks were ongoing with aircraft manufacturers for PAL to acquire at least 100 new aircraft in the next five to seven years.
For the period 2011-2012, SMC expects to post a strong double-digit compounded annual growth rate, driven primarily by earnings contributions from new businesses—mainly power and Petron Corp.
“The goal we have set may sound very ambitious, but we believe it can be done through further acquisitions and organic growth,” Cojuangco said.
When asked by a shareholder whether SMC was interested in going into broadcasting, Ang said: “Yes, we are seriously considering that option.”
“Today’s San Miguel is a diversified company: A beverage and food company, an oil refiner and marketer, a power generator and distributor, a builder and operator of toll roads and airports. The reshaping of San Miguel continues to have a significant impact on our financial results,” Cojuangco said.
Last year, new businesses contributed about 63 percent, or over P345 billion in total, to SMC’s sales.