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.
Indigo Partners assesses ultra-low cost airline (ULCC) investment opportunities in Southeast Asia
US airline investment firm Indigo Partners is assessing new low cost airline investment opportunities in Asia with a focus on the ultra-LCC or ULCC model. Indigo has not had an investment in Asia since selling its stake in Singapore-based Tigerair five years ago, but currently has large stakes in LCCs based in Europe and North America.
Indigo believes there could be room for a ULCC in the Southeast Asian market despite already intense competition and a huge LCC order book, because the LCCs now operating in this region are not true to the LCC model. Several Southeast Asian LCCs, including Tigerair, are owned by full service airline groups, leading to a dilution of the typical LCC model.
India is also a market of interest for Indigo. However, the firm is not interested in North Asia at this point, despite that region's much lower LCC penetration rate. Australia is also not of interest as it is already mature.