A major foreign airline completed the due diligence prior to the acquisition of a significant stake in Philippine Airlines, a top executive said over the weekend.
Philippine Airlines said it expected a new strategic investor within the first half of the year, as the due diligence or comprehensive appraisal was already completed.
“The due diligence [was] already completed. We’re talking about nitty gritty of [the transaction. Valuation is one,” PAL president and chief operating officer Jaime Bautista said.
Bautista said he was hoping the transaction would be completed within first half of 2017.
He did not disclose the identity of the strategic investor, but said it’s an “airline in the world.”
Bautista said PAL expected to sell up to a 40-percent stake to the strategic investor.
PAL posted a net profit last year, Bautista said. PAL Holdings Inc., the parent company of the flag carrier has yet to fully disclose the actual net income data.
The airline, now wholly-owned by tycoon Lucio Tan after he bought back a 49-percent stake that San Miguel Corp. purchased from him in 2012, posted a net income of P2.55 billion in January to September 2016, lower by 57 percent than a year ago.
Revenues increased 3.5 percent in the nine-month period to P85.35 billion, with passenger revenues rising 4.7 percent to P71.47 billion.
Bautista said 2017 would be a challenging year for PAL because of rising fuel prices and intensifying competition.
“Price of fuel is going up. Competition is there,” he said, adding that the Manila airport was now congested.
“That’s why we’re expanding our operations in other airports such as Clark, Cebu, Davao,” Bautista said.
PAL signed a memorandum of understanding in February last year with Airbus for the acquisition of six A350-900 aircraft with an option for another six planes for delivery from 2018 to 2019.
The orders were valued at $1.83 billion.
PAL plans to deploy the A350 extra wide-body aircraft, which seat more than 300, on new routes to North America and Europe. The first A350 is scheduled for delivery in 2018.
PAL is also expanding its service between Manila and seven cities in the Middle East. PAL said it would fly non-stop from Manila to Dubai, Doha, Kuwait, Jeddah, Abu Dhabi, Dammam and Riyadh.
PAL is currently flying to Kuwait and Jeddah via Dubai, while the Manila to Doha flight is via Abu Dhabi.
“The non-stop service will give us a better product to offer our kababayans, our overseas Filipino workers,” Bautista said earlier.