PAL: Investment Talks with ANA were Shelved

Philippine Airlines has confirmed that All Nippon Airways is no longer interested in investing in the flag carrier. It was revealed last year that discussions had taken place between the two airlines for part of Lucio Tan's stake to be sold to the Japanese carrier.

Copyright Photo: Angelo Agcamaran/PPSG

"Originally, what ANA wants is an investment but later on many meddled in the talks so the talks on investment were shelved," said Ramon Ang, President of PAL. However, although talks on a possible investment are off the table, the two carriers remain interested in pursuing a partnership through code-sharing. 

Code sharing enables multiple airlines to share one flight. It involves one carrier selling a seat on a flight that is operated by another carrier using a separate flight number. "We are talking about code sharing," said Ang. "We are looking at what we can do together to be able to improve our service. We hope to be able to close the deal within 30 days."

With PAL's recent interest in expanding services in the Japanese market to meet growing demand and on-going congestion at Ninoy Aquino International Airport, a code-sharing agreement would benefit both airlines especially at airports where slots are restricted. In addition, each airline could obtain access to their partner's respective domestic networks enabling more flight connectivity linking passengers to the country's top tourist destinations while also feeding more traffic to the code-share flights. 

Copyright Photo: Angelo Agcamaran/PPSG

Last year, the Centre for Asia-Pacific Aviation released a report indicating that there would be little to gain from an investment deal between the two carriers as few synergies exist. "The possible synergies between ANA and PAL are few," said CAPA in the report. "PAL has contentiously exited the Philippines' key low-cost segment and its long-haul ambitions will be challenging given the competition, its lack of geography or scale for connecting traffic, and a low profile without a global alliance or numerous partners."

Meanwhile, Lucio Tan continues to pursue discussions with foreign investors for the sale of his stake in Philippine Airlines. Although San Miguel Corporation has the option to purchase Tan's stake in the airline, Ramon Ang recently stated that the conglomerate would stick with its 49 percent investment. San Miguel Corporation acquired its 49 percent stake in PAL in April 2012 when it invested $500-million. The LT Group Inc, the holding company for Tan's businesses, has also decided to forego acquisition of Tan's shares in the carrier as it has decided to concentrate on its holdings in consumer goods and services. 

Last year, Tan, the second richest man in the Philippines, announced plans that he was going to drop out of the aviation business after being approached by foreign investors for a stake in the flag carrier. Tan confirmed that he was in talks with foreign parties and that he is keen on finalizing a share sale in the first quarter of this year. "We are in talks with foreign parties. Local wala," said Tan.