PAL Shares Soar After Trading Resumes

After being suspended for failing to meet the 10% minimum public float imposed by the Philippine Stock Exchange, share trading of PAL Holdings, operator of Philippine Airlines, finally resumed on Friday, July 12.

Copyright Photo: Angelo Agcamaran/PPSG
The news coincided with the announcement by the European Union that Philippine Airlines would be permitted to restore service to destinations in Europe. The positive sentiment resulting from the European announcement fueled shares of PAL Holdings to increase by 41.84% closing the day at P6.95 each. According to Gregg Adrian Ilag of AB Capital Securities, the PAL shares closed on a strong point on its first day of trading as a result of a sudden spurt in liquidity. "Usually, companies that have resumed trading after a long suspension shows strong exuberance and makes the stock hit the ceiling," Ilag said.

PAL shares had been under suspension since January 2, 2013. The shares were last traded on December 28, 2012 when they closed at P4.90 each. On July 10, 2013, the Philippine Stock Exchange released a memorandum advising that PAL Holdings had managed to meet the 10% public ownership rule and that trading would resume on Friday.

Ilag noted that the lifting of the air ban played a significant role in the stock's share price increase. "That is a positive thing for PAL. However, the profitability in that endeavour will not be immediately reflected in the company's share price due to questions on the long haul model's conduciveness amid jet fuel costs," Ilag said.

Philippine Airlines intends to resume flights to Europe beginning in October 2013 with Amsterdam, Paris, London, and Rome scheduled to be the initial destinations. The carrier has filed slot applications with various airports but all have yet to be approved. San Miguel Corporation purchased a 48% stake in Philippine Airlines in April 2012 for $500 million. The airline is currently seeking a strategic partner to assume Lucio Tan's 51% stake in the airline.

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