PAL turns a profit, tycoons tangle for control

The battle for control of Philippine Airlines (PAL) – Asia’s oldest airline – continues between two of the country’s richest tycoons as the Lucio Tan Group presented a buyout proposal to Raymond Ang’s San Miguel Corporation (SMC) for its 49 per cent stake in Philippine Airlines.


PAL turns a profit tycoons tangle for control


The battle for control of Philippine Airlines (PAL) – Asia’s oldest airline – continues between two of the country’s richest tycoons as the Lucio Tan Group presented a buyout proposal to Raymond Ang’s San Miguel Corporation (SMC) for its 49 per cent stake in Philippine Airlines. The Tan Group has been busy working to raise the nearly US$1 billion required to buy out the diversified conglomerate. Once control has been regained, Tan reportedly wants to take on Abu Dhabi-based Eithad Airways as an equity partner.

While the take-over battle rages behind closed doors, the carrier released its financial results for the second quarter of 2014, marking a turnaround for the carrier with its first profit in several years, suggesting that PAL’s management, now led by San Miguel Corp., was making progress in making the flag carrier profitable once again.

In a stock exchange filing PAL posted a net income in the three months ending June of P1.46 billion (US$33.3 million) versus a loss of P1.06 billion during the same period last year. PAL booked a net income of P361.4 million in the first six months, although comparative figures were not available.

Despite fierce competition with budget carrier Cebu Pacific Air, which has rapidly expanded its business and market share by offering cheaper fares in line with its low-cost carrier model, PAL nevertheless managed to grow revenues by 47.4 per cent to P27.3 billion during the second quarter of 2014. Of that figure, about 85 per cent came from passenger revenues, which increased by half to P23.1 billion.