Clarification of News Reports

This refers to your letter dated January 23, 2019, seeking clarification of the news articles entitled "Japan's biggest airline buying stake in PAL", posted in inquirer.net on January 22, 2019 which reported in part that:

"Philippine Airlines (PAL) is ending a long-running search to secure a strategic foreign investor as the group behind All Nippon Airways (ANA), Japan's biggest airline, is finalizing its entry into the country's flag carrier.

Inquirer sources with knowledge of the matter told the Inquirer that ANA Holdings was nearing a deal to take a minority stake in PAL, Asia's oldest as it turns 78 this year, and that an announcement was due in the coming weeks.

ANA's entry is seen part of a plan by PAL's controlling shareholder and chair, taipan Lucio Tan, to establish the carrier as a world-class airline.

PAL's most visible goal is to clinch five-star status from the closely-followed SkyTrax ratings by 2020.

For ANA-a five-star carrier which cited in its 2018-2022 corporate strategy its intention to 'leverage on every business opportunity as a tailwind'-the decision to invest in PAL is a step up from an existing codeshare deal that was sealed in 2014.

Moreover, it would get direct exposure to PAL's growth prospects, which include opening more international routes serving leisure and business travelers as well as the 10 percent of Filipinos living and working overseas.


There were no details on the value of the transaction. Another source said ANA had acquired an initial 8.8-percent stake in Vietnam Airlines in 2016 and it was likely the investment in PAL would initially approximate this size.

Sought for comment on Tuesday, PAL spokesperson Cielo Villaluna said the airline was hoping to close an agreement with a potential foreign investor by the first half of 2019 as she reiterated an announcement by PAL president Jaime Bautista in a press conference earlier this month.

. . . .

PAL's last major investor was conglomerate San Miguel Corp., which acquired a 49-percent stake in 2012. Two years later, Tan decided to buy back full control. The company's search for a new foreign partner also started around that period.

PAL recently revealed plans to launch or revive routes to Vietnam, Cambodia and India while moving to finalize flights to Israel and a new destination in the United States within 2019.

The expansion was prompted by the arrival of new planes, including its first batch of Airbus A350-900, and the recent decline in the price of jet fuel, whose upward surge in 2018 weighed on the industry's profitability.

By 2021 PAL is expecting to carry some 21 million passengers from 15 million in 2017, when that target was first revealed. . . ."

Please be informed that as mentioned previously, PAL has always been open to the possibility of a strategic investor. As of date, there is no definite agreement between PAL and any investor.

PAL plans to establish itself as a world-class airline, but said goal does not necessarily involve the entry of any investor. In 2018, PAL has improved its rating internationally even without the support of an investor.

With respect to ANA's supposed corporate strategy and its supposed acquisition of a stake in Vietnam Airlines, we cannot comment on the matter as we are not privy to the same.

We hope you find the foregoing clarification satisfactory.