Philippine Airlines expects to close a deal with a strategic investor within the year despite the declaration of martial law in Mindanao which can affect the flag carrier’s domestic flights, a top executive said.
PAL president and chief operating officer Jaime Bautista said the martial law in Mindanao could be an issue to the potential strategic investor.
“This is an issue that will be addressed. If you are an investor, you will think twice. We will explain this to them,” Bautista said.
President Rodrigo Duterte declared martial law in Mindanao to suppress violence and restore order in Marawi City.
Bautista said the airline was currently in talks with possible investors. “We’re hoping we can close the deal within the year,” he said.
PAL Holdings Inc., the parent company of PAL, announced a equity restructuring ahead of the expected entry of a strategic investor this year. The investor is expected to acquire up to 40 percent of the flag carrier.
PAL Holdings, which controls both Philippine Airlines and PAL Express, earlier secured an approval from its board to reduce its authorized capital stock from P30 billion, divided into 30 billion common shares with a par value of P1 to P18 billion divided into 30 billion common shares with a par value of P0.60 per share, without returning any portion of the capital to stockholders.
PAL tapped Morgan Stanley as financial advisor for the transaction.
PAL is taking delivery of seven brand new aircraft worth over $550 million, within the second half of the year as a part of its fleet expansion and modernization program.
The airline led by tycoon Lucio Tan expects delivery of two Boeing 777-300 ER in December and five next-generation Bombardier Q400 in July to November.
The twin-engine A350-900 will become PAL’s new flagship aircraft.
PAL ordered six A350s, with an option for six more. The aircraft is capable of flying non-stop from Manila to New York.
The additional B777-300 ERs will be deployed to the London and North American routes.
PAL’s parent firm PAL Holdings Inc. earlier posted a total net loss of P904.7 million in the first quarter, a downturn from P2.71-billion income last year.