PHILIPPINE AIRLINES BACKGROUND Philippine Airlines, Inc.

(abbreviated as PAL and also known historically as Philippine Air Lines) operating as Philippine Airlines, is a flag carrier of the Philippines. Headquartered in the Philippine National Bank Financial Center in Pasay City, the airline was founded in 1941 and is the first and oldest commercial airline in Asia operating under its original name. Out of its hubs at Ninoy Aquino International Airport of Manila and Mactan-Cebu International Airport of Cebu City, Philippine Airlines serves twenty destinations in the Philippines and 26 destinations in Southeast Asia, South Asia, East Asia, Oceania and North America. Formerly one of the largest Asian airlines, PAL was severely affected by the 1997 Asian Financial Crisis. In what was believed to be one of the Philippines' biggest corporate failures, PAL was forced to downsize its international operations by completely cutting operations to Europe and eventually Middle East, cutting virtually all domestic services excluding routes operated from Manila, reducing the size of its fleet and terminating the jobs of thousands of employees. The airline was placed under receivership in 1998, gradually restoring operations to many of the destinations it formerly serviced. PAL exited receivership in 2007 with ambitious plans to further its previously serviced destinations, as well as diversify its fleet. Philippine Airlines is the only airline in the Philippines to be accredited with the IATA Operational Safety Audit (IOSA) by the International Air Transport Association (IATA). Philippine Airlines carried more than 9 million passengers during the 2010-2011 period.

---LUCIO TAN GROUP AND SAN MIGUEL CORP. PARTNERSHIP--MANILA, PhilippinesSan Miguel Corp. has signed a $500-million deal to acquire a significant stake in flag carrier Philippine Airlines and affiliate budget carrier Air Philippines Corp., thus teaming up with the Lucio Tan group for the modernization and re-fleeting of these carriers. In a statement jointly issued by the Lucio Tan group and SMC, the two groups said this new partnership would allow the two airlines to strengthen operations and stay competitive with the implementation of PAL and AirPhils fleet modernization program. SOURCE: http://business.inquirer.net/52433/lucio-tan-smc-ink-pal-buy-in-deal

San Miguel buys into Philippine Airlines

MANILA | Wed Apr 4, 2012 12:50am EDT (Reuters) - Conglomerate San Miguel Corp said on Wednesday it will buy minority stakes in flag carrier Philippine Airlines Inc (PAL) and a sister airline, broadening its business reach after its expansion into power, infrastructure, mining and telecoms. The size of the deal was not disclosed, but sources have previously said San Miguel has been seeking to pay about $500 million for a stake of more than 40 percent of PAL, which is facing tough competition from low cost rivals. The deal with tobacco tycoon Lucio Tan's Trustmark Holdings will give San Miguel indirect stakes in both PAL and its low-cost partner firm Air Philippines Corp, also known as Air Phil. The investment would be used to strengthen the operations of PAL, which has previously said it needs to upgrade its fleet and expand operations to stay competitive with budget operators such as Cebu Air Inc (CEB.PS). "The new investment will allow the two airlines to strengthen operations and stay competitive with the implementation of PAL and Air Phil's fleet modernization program," San Miguel and Trust Mark said in a joint statement. "San Miguel welcomes the opportunity to participate in the refleeting and modernization plans of the two airlines." PAL, which has also suffered from rising fuel costs and labor problems, posted a net loss of $33.5 million in the three months ending December 31 compared with a net profit of $15.1 million a year earlier. Under the deal, San Miguel will receive shares from Trustmark Holdings Corp and Zuma Holdings, the holding firms of Philippine Airlines and Air Phil. Shares of PAL's majority stakeholder PAL Holdings Inc (PAL.PS), which is 97 percent owned by Trustmark, fell up to 2.4 percent on Wednesday after hitting a record high the previous day. San Miguel was up 0.8 percent in a flat broader market .PSI. San Miguel has been expanding into capital-intensive sectors in the last four years as it seeks faster profit growth after dominating the local food and drinks sector for decades. It was not clear how San Miguel would fund its entry into the airline sector. The group sought a loan equivalent to $800 million to complete its $577 million acquisition of 65 percent of Esso Malaysia Berhad, and 100 percent of both ExxonMobil Malaysia Sdn Bhd and ExxonMobil Borneo Sdn Bhd last month.

Lucio Tan to sell majority stake in PAL at the right price

Top-level negotiations are ongoing regarding the sale of a majority stake in flag carrier Philippine Airlines, owner Lucio Tan told reporters in an interview over the weekend. If the price is good, then he is selling, the business tycoon said on the sidelines of Bangko Sentral ng Pilipinas annual reception for bankers. Some of my friends are interested in investing in PAL, including corporate tycoons Ramon Ang of San Miguel Corp. and Manuel Pangilinan of Philippine Long Distance Telephone Co., noted Tan, but declined to comment on specific talks with any of the parties involved. In Malacaang on Monday, presidential spokesperson Edwin Lacierda told reporters that government welcomes such developments regarding PAL. We welcome the additional investment of whoever would like to buy PAL, because it would mean additional investments to the country," Lacierda said.

Considering the PAL is our national brand, the additional investments would improve the branding of our national carrier, the Palace official added. Publicly listed PAL Holdings Inc., led by Tan, owns 94 percent of the flag carrier. Early this month, PAL employees told reporters they have no other information regarding the top-level talks with potential investors. According to a Reuters report last Dec. 28, San Miguel Corp. has invited Tan to help the flag carrier pursue its refleeting and modernization plans. San Miguel, in a disclosure to the stock exchange, confirmed local media reports it was in talks with Tan's PAL Holdings Inc., owner of Asia's oldest airline, but no agreement has been forged yet, Reuters added. PAL posted a $39.4-million loss in its fiscal second quarter from July to September 2011 on higher operating expenses, particularly the cost of jet fuel. The airline projected its average fuel cost at $120 per barrel, but the actual cost was $135 per barrel. Higher fuel costs and revenue losses as a result of a labor dispute will give the airline another bottom line in the red in its current fiscal year, according to PAL. VS, GMA News