San Miguel Corp (SMC) is close to reaching a deal to purchase 49% of Philippine Airlines having completed due diligence on the carrier, according to a report in Reuters. The deal, which is worth approximately USD500 million, would give SMC management control of the airline. Philippine Airlines' current owner Lucio Tan would decrease his stake in the company to 51%. Philippine Airlines president Jaime Bautista said the talks only involve SMC and Lucio Tan, not the airline itself.
SMC reportedly close to deal to purchase stake in Philippine Airlines
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Southeast Asia-US market Part 3: new nonstops need to overcome stiff one-stop FSC & LCC competition
Southeast Asian airlines are seeking to capture a larger share of the Southeast Asia-US market over the next few years as they launch new flights to the US. Three of the region’s flag carriers and at least one long haul LCC are planning to launch flights to the US, intensifying competition in an already fiercely competitive market.
Southeast Asian airlines currently account for less than a 20% share of the total Southeast Asia-US market. Philippine Airlines and Singapore Airlines are the only significant players in this market and are aiming to increase their share as they add new nonstop routes. Garuda Indonesia, Thai Airways and Vietnam Airlines are also keen to become significant players as they launch flights to the US, replacing their now limited offline products.
However, market share gains will likely come at the expense of yields and profitability as competition with North Asian airlines – and to some extent US and Gulf carriers – intensifies. North Asian airlines now account for more than 50% of bookings in the Southeast Asia-US market and have increased their reliance on Southeast Asian connections as they have added US capacity, resulting in very competitive fares.
Philippine Airlines Part 3: more USA growth planned, as A350s arrive and partnerships are pursued
Philippine Airlines (PAL) is seeking to improve its position in the North American market by boosting capacity and partnering with a US airline. PAL has been able to increase its presence in the US since the FAA upgraded the Philippines to a Category 1 safety rating in 2014, enabling PAL to increase capacity, launch new routes and pursue codeshares with US airlines.
PAL launched services from Cebu to Los Angeles in Mar-2016 and in the coming weeks is planning to add capacity on Manila-Los Angeles – one of its largest and most profitable international routes – using a newly delivered 777-300ER. PAL may also add capacity to San Francisco in 2017 and is planning to use its new A350-900 fleet to launch nonstop flights to New York, and potentially Chicago, in 2018.
PAL also has begun searching for a US partner to help it feed an expanded US operation. Securing a US partner is key to supporting further growth and further boosting its share of the Philippines-US market as competition intensifies.