Tan Intends to Buy Out Minority Shareholders in Philippine Airlines, Resignations Expected

After successfully regaining control of national flag carrier, Philippine Airlines, Lucio Tan is now seeking to consolidate control further as he makes plans to buy out shares held by minority shareholders.

lucio tan philippine airlines
Image Source: 9News.ph
Although the business tycoon recently purchased the 49 percent stake in PAL Holdings, which controls 90 percent of Philippine Airlines, there is still a remaining 10.22 percent that is floating freely on the Philippine Stock Exchange. However, Tan wants to buyout the minority shareholders at a price lower than the company's current market price.

According to Philippine Airlines President Jaime Bautista, Tan is interested in acquiring minority holdings at a price similar to that agreed upon with San Miguel Corporation. "We are already in control but if the minority is willing to sell, we will commit to buy them out at the same economic terms that was agreed with San Miguel," said Bautista.

The valuation used to purchase shares from San Miguel Corporation was lower than the current market value. It was recently revealed that Tan intended to buy out the minority shareholders at a price of 1.19 pesos per share. That figure represents less than 25 percent of the stock's current price. PAL Holdings has been trading on the Philippine Stock Exchange at approximately 5.30 pesos per share. However, Tan intends to maintain the open offer until November 19.

Meanwhile, internal changes continue at Philippine Airlines after the recent appointment of Jaime Bautista as the airline's President, replacing Ramon Ang. Earlier this month, it was revealed that Neil Mills, one of the expatriate consultants that was hired by San Miguel Corporation, has resigned from the airline. Mills was acting as Chief Executive Adviser to Ramon Ang since September 2013.

It should come as no surprise that Philippine Airlines shifted much closer to a low-cost carrier model under the leadership of San Miguel Corporation given that its chief adviser had an extensive low-cost carrier background. Mills was previously the CEO of Indian low-cost carrier SpiceJet Airlines, CFO at UAE low-cost carrier FlyDubai, and Procurement Director at UK-based low-cost carrier EasyJet.

Many passengers previously loyal to Philippine Airlines complained that the airline started to look more like Cebu Pacific under the leadership of Ang, rather than a full service legacy airline and national flag carrier. One major move made by the airline under the leadership of San Miguel Corporation was to ditch traditional embedded seat back in-flight entertainment aboard its new long-haul fleet in favour of a wireless system that requires the use of passenger's personal devices.

Although Mills is currently the only PAL executive to hand in their resignation since the Tan Group regained control of the carrier, it is believed that other senior executives are likely to follow including those at the carrier prior to the arrival of San Miguel Corporation. The Tan led management are vigorously sifting through key management to establish where their loyalties lie.

17 comments:

  1. PAL is losing a lot of young talent fast. Perhaps PAL under the LT group should make an honest to assessment of where it is now. From a customers perspective, it's better off under the SMC group.

    ReplyDelete
    Replies
    1. Those "young talents" you might be talking about are not strategic thinkers. They could not even identify risk and neither do they understand mitigation. They have no idea at all what is operating environment. and most of them are SMC staff deployed at PAL. to top it all they do not have any idea that PAL must operate under the aviation regulatory environment. So frustrating to listen them talk. They are good at making noises and but lack the planning, implementing and evaluating skills.
      - Simon Kay

      Delete
    2. I also suggest that these "young talents" should travel the world so they will have idea of what is at stake like population, culture, gross national product, competition, and the most important of all: Geography. Example, a young airline executive should know that trying to deal with ANA to use Haneda as stopover point to PAL's flights to Europe is really nonsense. It's like going to Davao from Manila and stopping over in Laoag!

      Delete
    3. Esp. since those supposedly "young talents" came from a background of low cost carriers. Operating PAL like a low cost carrier is a huge mistake. Be glad they are gone.

      Delete
  2. Out are SVP Nikki Gozon & PALExpress CEO Cesar Chiong.Both were not invited at Tan's welcome party.

    ReplyDelete
  3. Sana nga totoo nga na wala na si Cesar Chiong sa PAL Express.Wala naman kwenta yan.

    ReplyDelete
  4. Why do you insist a legacy carrier style for PAL when it lacks a lot of things and ideas that competes with the likes of Singapore Airlines, Cathay Pacific, Korean and Asiana? Just leave PAL finds a way to increase its revenues at all cost (shift to low-cost style as it is now in real danger because of the phenomenal entry of Cebu Pacific in the airline business). Remember, we are talking business here! Business is always profit-oriented, right? (Lest PAL is a charitable non-profit business entity?)

    ReplyDelete
  5. Right! PAL, stop talking, complaining, whining, etc Go get the money so you can pay your obligations! Your financial timetable is ever eroding and timeline is decreasing!

    ReplyDelete
  6. Yung mga dati, kala nila marami silang alam. Yan, kaya nandyan ngayon ang PAL. All industries are regulated and operate in environments. If you think that the aviation industry is special then that is being narrow-minded and stupid. Cebu Pacific and Air Asia were both new players but are now leaders in the industry. Baka sabihan nyo ay iba yan LCC yan....

    ReplyDelete
  7. Maybe it is like this. PAL is in a race together with Cebu Pacific and Air Asia. Lets talk Domestic Flights. All 3 of them are in the Starting Line with a goal to reach the Finish Line first.

    Kaya lang parang ang PAL ay kung ano-ano ang inaatupag kaya imbes na marinig yun signal na start na ang race ay nasa Starting Line pa din at ang dami-dami pa sinisisi imbes na tumakbo na lang ng tumakbo forward forward forward.

    Meanwhile, malapit na sa Finish Line yun dalawa while ang PAL ay nakatayo pa din sa Starting Line at nag-iinarte pa.

    Sa madaling salita. Kulelat na naman ang PAL.

    ReplyDelete
    Replies
    1. At naparami ang obligations ng PAL gaya ng mga eroplanong inorder in Ramon Ang. Tuloy pa rin ang schedule ng delivery at tuloy din ang paglaki ng payables at interests ng utang nila sa Airbus Industries, France. Mantakin mo, hindi presyo ng mani ang bagong eroplano
      Que disastro!

      Delete
    2. Walang duda... kung malaki ang payables ang business at maliit ang kita, siguradong sa pulang tinta (red ink) siya papunta!

      Delete
  8. You can thank Neil Mills for the shitty downgrade in PAL's services in recent years. Now that he is gone, expect PAL's quality of services to improve. And good riddance. The first mistake of PAL under Ang was to operate like a low cost carrier (which PAL is NOT).

    ReplyDelete
  9. No one is saying that PAL operates like a LCC. PAL can operate whatever way it likes so long as it keeps its market share and show leadership in the Philippine market, meaning No.1 in both Domestic and International markets

    How PAL will do it definitely will depend on the direction of Lucio Tan for PAL and on his choice of people who will bring in the income for PAL.

    Sorry to say but a lot of people in PAL are under performers and low achievers, meaning they always fall short of expectation so they put up easy goals where they can claim big achievements.

    Not to mention how PAL looks down on LCCs, which has the real talent to woo the market beating PAL in every way.

    How funny how PAL keeps on acting like a DIVA whose time has passed, even thinking it is at par with the 5-star airlines when the actual level of PAL is akin to that of Sri Lanka Airlines.

    PAL should learn to eat humble pie and reboot its thinking to the 21st century.

    ReplyDelete
  10. Beaver says I also have such interest, you can read my profile here: browse around here

    ReplyDelete
  11. You know your projects stand out of the herd. There is something special about them. It seems to me all of them are really brilliant! xhamst

    ReplyDelete

Powered by Blogger.