Philippine Airlines expects to close a deal with a strategic investor this year, ahead of the original target of 2018, a top executive said over the weekend.
“We are looking at finalizing a deal with a strategic investor, hopefully this year. It takes time for a strategic investor to finalize their decisions. There’s negotiations, you have to agree on the valuations and you have to agree on the management,” PAL president and chief operating officer Jaime Bautista told reporters Friday night.
Bautista did not name the strategic investor because of confidentiality agreement. Unlike a financial investor, a strategic investor infuses capital in the subject company and is more involved in operation, sharing technology, experience and market to help the investee succeed.
Bautista said PAL was willing to sell “up to a percentage that is allowed by law.” A foreign investor can acquire up to 40-percent equity in the flag carrier.
PAL tapped Morgan Stanley as financial advisor for the transaction.
“If [we] still need funds, we can do re-IPO [initial public offering],” he said. The proceeds of the re-IPO would be used to fund the expansion program he said.
PAL Holdings Inc., the listed parent company of the airline, has a public float of only 10.22 percent. The company has a market capitalization of P127.7 billion.
PAL Holdings listed in the Philippine Stock Exchange in 2007 using a ‘backdoor’ route through Baguio Gold. In the fourth quarter last year, PAL Holdings consolidated its 100-percent control of the airline and conducted a share swap to take ownership of Zuma Holdings Management Corp. which owns PAL Express.
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 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.
Bautista said the airline expected to post a net profit in 2016.
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 from 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.