Philippine Airlines Seeks Investor For Up To 40% Stake, Wants To Become 5 Star Airline By 2020

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Philippine Airlines has set itself an ambitious goal to become a 5 Star rated carrier within the next three years and seeks investors to make this vision become reality.

The airline’s holding company PAL is willing to give up to 40% of it’s shares up to potential investors which is the maximum amount of shares permitted under Philippine law.

They certainly have a long way to go to reach this target, especially with the infrastructure of their home airport Manila and connected issues such as criminality of some staff such as in the cases of the ‘Lag Lag Bala Bullet Scam’ we reported about.

The Nikkei Asian Review (see here) has a detailed article about PAL’s aspirations for their (in)famous airline.

Philippine Airlines is hoping to strike a deal with a foreign investor within the first half to help the carrier upgrade services and expand its network globally, President Jaime Bautista said.

Speaking to reporters on March 24, the head of the Philippines’ largest airline declined to name the potential partner. But he said discussions were in “advanced” stages and a due diligence had been completed. …

Bautista said PAL is willing to give up as much as 40% of the company, the maximum allowed in the Philippines for industries like aviation. But the investor may take less, he said.

The investor will infuse fresh equity into PAL, which plans to purchase more aircraft, and contribute to its management, he added. It will also help PAL improve its services and expand its international routes through code-share agreements. The Philippine carrier hopes to achieve by 2020 a five-star rating from Skytrax, which describes its rating system as “a global benchmark” based on the “quality of frontline product and staff service standards.” …

They probably won’t be achieving 5 Stars unless they give Skytrax some lucrative ‘consulting’ project for service and infrastructure improvements but that’s a whole different matter.

… PAL’s management embarked on a five-year plan in 2016 to bring back the “glory days” when it became the first Asian airline to cross the Pacific Ocean in 1946. The company returned to profitability in 2014 after years of suffering from mounting losses due to high fuel and maintenance cost as well as labor disputes.

The service on board Philippine Airlines is actually quite good but as with so many airlines the devil is in the detail and that would be ground services, home airport, schedule reliability and safety. None of these factors are very favorable for PAL at this given moment.

Conclusion

Sure maybe if you pour enough money into Philippine Airlines you might be able to make it a five star carrier but that sounds very much like the old saying ‘How to become a millionaire in the airline business? Start as a billionaire!’

I for one am really interested to see if that ‘deal’ they are talking about comes through or not. Philippine Airlines isn’t a lean and clean budget airline, it’s a flag carrier that as many others comes with plenty of baggage such as pensions, labor disputes, corruption and all kinds of issues. The Philippines also puts restrictions on the fares such as the ban of fuel surcharges so no money to be siphoned off there either. I wonder what kind of investor would touch that even with a stick.

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