Foreign Airlines Interested in Philippine Airlines

Sources of the Philippine Daily Inquirer have indicated that San Miguel Corporation is in talks with Tokyo-based All Nippon Airways (ANA) and Dubai-based Emirates Airlines on a prospective investment and strategic partnership with Philippine Airlines. 

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Last month, Lucio Tan indicated his desire to sell his 51-percent stake in the airline. While San Miguel maintains an option to consolidate its shares in Philippine Airlines, SMC president Ramon Ang says that the corporation is open to joining forces with a strategic partner. Ang confirmed that Emirates and ANA had expressed interest in investing in Philippine Airlines and that a partnership could materialize within the year. 

Copyright Photo: Angelo Agcamaran/PPSG

All Nippon Airways is Japan's largest airline. It was the launch customer and first operator of the Boeing 787 aircraft. The airline currently operates daily flights between Tokyo and Manila. San Miguel Corporation is familiar working with Japanese corporations and already maintains existing partnerships. Dubai-based Emirates is recognized as one of the top ten airlines in the world. In addition to being the largest airline in the Middle East, the airline is known as an industry leader. Emirates currently operates regularly scheduled flights between Dubai and Manila. The airline will be launching a new direct service to Clark Airport in October. 

Copyright Photo: Angelo Agcamaran/PPSG

Under the current Philippine constitution, foreign airlines are restricted to owning up to 40 percent of Philippine Airlines. However, there have been recent talks in government about making amendments to the rule that restricts foreign ownerships in key industries to encourage more global investment in the country to help drive economic growth further. 

Philippine Airlines is currently in the process of a global expansion to twelve new destinations in Australia, Asia, and the Middle East. The airline is eagerly anticipating a decision from the European Union which will determine whether the airline will once again be able to mount flights to member countries in Europe. A decision is due early this week. Meanwhile, the airline's massive refleeting program continues with the first of several new Airbus A321 aircraft scheduled to arrive next month. 

Ang is confident that Philippine Airlines will turn a profit by 2014. "We're 100 percent positive that it will be profitable by next year," Ang said. He went on to say that the refleeting program will enable the airline to improve operating efficiencies and reduce fuel and maintenance costs. Ang expects the cost of maintenance and fuel to slide down to 40 percent of revenues in the very near future from the current rate of 60 percent.