PAL: Foreign strategic partner likely to come in by next year

TORONTO – Philippine Airlines (PAL) may have to wait until next year before it closes a deal with a foreign strategic investor, depending on the operating environment and market situation, PAL president and COO Jaime Bautista said in a briefing here.

“Discussions continue. It may happen this year or next year,” Bautista said following the delivery ceremony for PAL’s Q400, the world’s first dual-class, 86-seater aircraft.

He said if the operating environment remains challenging, the company may have to wait for the situation to improve before it seals a deal with a foreign airline.

“Hopefully, we will get profitable again this year,” Bautista said.

In 2016, PAL Holdings Inc., the operator of PAL, reported a net income of P3.53 billion, down from P5.77 billion in 2015 despite growth in revenues because of higher expenses and tougher competition in the industry.

Bautista said it may not be practical to take in a strategic partner if the operating environment is not good.

He said the deal could involve the sale of 10 percent of the company but he also earlier noted PAL may sell as much as 40 percent.

“It should at least be 10 percent. Not lower. If it’s too small, it would not be worth it anymore,” Bautista told reporters.

Among the items under discussion with the foreign airline is the valuation and whether the strategic investor would enter PAL or listed PAL Holdings Inc. which operates the national carrier.

PAL senior vice president for corporate planning Angelito Alvarez, who is also here for the delivery ceremony, said the airline company could benefit from the entry of a strategic investor through new route development or code sharing agreement, contribution in equity, management or membership alliance.

The Lucio Tan-led airline took delivery of its first next generation Q400 aircraft at Bombardier’s facility here.       

This is the first of five aircraft to be delivered to PAL this year, and it will arrive in Manila on July 26 after leaving Canada, July 21.

The remaining orders will be arriving every month starting in August, while two Boeing-777s will arrive in December, bringing the airline’s current fleet of 81 to 88 by year-end, Bautista said.

The Q400s will be used in Cebu, Caticlan and Clark whose airports still have extra slots compared to the congested Ninoy Aquino International Airport, he said.

PAL’s new Q400 aircraft is configured with 86 seats in economy and premium economy classes with a 29-inch and 33-inch seat pitch respectively.