Airlines in the Philippines

[Airboy007]

Whoa. So much changes again in the coming weeks for sure. This is getting tiring but all the best for PAL. JJB is a great guy, and hopefully he can still proceed with further expansion in the coming years, and of course maintaining profitability. Im pessimistic about keeping the profits though.

As to us in the cabin, good bye coke and pepsi. Hello again virgin cola. Oh and yeah, youll be missed san mig light and san mig pale pilsen.

[seven13]

Airboy007 wrote

Whoa. So much changes again in the coming weeks for sure. This is getting tiring but all the best for PAL. JJB is a great guy, and hopefully he can still proceed with further expansion in the coming years, and of course maintaining profitability. Im pessimistic about keeping the profits though.

As to us in the cabin, good bye coke and pepsi. Hello again virgin cola. Oh and yeah, youll be missed san mig light and san mig pale pilsen.

Waah! Colt45 and Manila beer only? Foreigners do select SanMig brand specifically! Are there Virgin bottles or will it be cans all the way?

[Airboy007]

Back then virgin red and virgin light just come in cans. And yeah the san mig products are of course preferred by both BCL and ECY pax.

[Evodesire]

Goodbye also to the ticketing offices in the Petron stations. Rumors has it also that JJB has been holding office for about a month already. Does the LTG have anough $$$ on its war chest for its future long haul aircraft aquisitions? Or would the 777X/A350/more 77W dreams be placed back to the freezer?

[cabinpressure]

Hello everyone, newbie here! Actually, long time lurker. Just want to share an interesting bit about LTG's buyback:

Lucio Tan takes back PAL
By Amado P. Macasaet | September 10, 2014

An official of PAL, friendly to both Ang and Lucio Tan, confided the Tan group will ask for a deferment of the delivery of 40 of the new airplanes. The purchase agreement specifies full payment in the next six years until 2020....

The Tan group, sources in the airline said, is paying for what is generally described as improvement in management efficiencies introduced by Ang. - See more at: http://www.malaya.com.ph/business-news/business/lucio-tan-takes-back-pal#sthash.XixCX1gq.dpuf

IMHO, I cannot see the business rationale about this deal on the side of LT. It's kinda screaming desperate for some reason.

[swahi]

does it also mean the end of the bacolod chicken they always serve on international flights? Nakakasawa for frequent travellers!

As I've said before, I've had personal dealings with JBB.  He is a nice guy, but conservative in approach. Is it him or is it his boss, or is it both?

Hope for the best, expect the worst. I never liked virgin cola.

[Evodesire]

Really worried about PAL going back to the hands of the LTG. What the RSA group achieved in 3 years was not matched by the LTG in so many years. Well, have to give credits to them for the 77W orders. Lets just hope for the best but as what Airboy has said, expect the worst.

RSA has this thing of aggressive expansion and making things work. How many times did PAL under the LTG attempt to fly to the ME but they pulled out after some time, but under the SMC group, it worked. Include YYZ too.

Also, LTG takes over and next thing they will do is to defer delivery of the brand new aircraft. Just shows what future PAL may face with the LTG back in control.

[romantic_guy08]

Evodesire wrote

Goodbye also to the ticketing offices in the Petron stations. Rumors has it also that JJB has been holding office for about a month already. Does the LTG have anough $$$ on its war chest for its future long haul aircraft aquisitions? Or would the 777X/A350/more 77W dreams be placed back to the freezer?

LUCIO TAN TAKES BACK PAL
By Amado P. Macasaet | September 10, 2014

An official of PAL, friendly to both Ang and Lucio Tan,  confided the Tan group will ask for a deferment of the delivery of 40 of the new airplanes.  The purchase agreement specifies full payment in the next six years until 2020.  

[cabinpressure]

LTG's re-entry will usher in a period of malaise, at least in the meantime, especially for the labor unions. SMC brought a lot of good synergies for PAL, from its food business to Petron (and not just in payment and ticketing for sure). Doubtful if it worked the other way. But it was really RSA's hand who turned PAL's fortunes around, at least for a while. It was his "baby," as evidenced when he talks about it at length during interviews. What surprised me about PAL under SMC's management was how lack-luster their marketing was. Traditionally, SMC is very aggressive when it comes to that. It was only now that they've began improving.

I for one will give LTG the benefit of the doubt, but like the most of you, I will expect the worst. Unless of course they are really keen on bringing in a new foreign partner and not merely expect to make a profit from such a deal.

[Arianespace]

romantic_guy08 wrote

LUCIO TAN TAKES BACK PAL
By Amado P. Macasaet | September 10, 2014

An official of PAL, friendly to both Ang and Lucio Tan,  confided the Tan group will ask for a deferment of the delivery of 40 of the new airplanes.  The purchase agreement specifies full payment in the next six years until 2020.  

Ayon na. As expected. I find this scenario self fulfilling prophecy. Please see my previous comment on this.

cabinpressure wrote

LTG's re-entry will usher in a period of malaise, at least in the meantime, especially for the labor unions. SMC brought a lot of good synergies for PAL, from its food business to Petron (and not just in payment and ticketing for sure). Doubtful if it worked the other way. But it was really RSA's hand who turned PAL's fortunes around, at least for a while. It was his "baby," as evidenced when he talks about it at length during interviews. What surprised me about PAL under SMC's management was how lack-luster their marketing was. Traditionally, SMC is very aggressive when it comes to that. It was only now that they've begI for one will give LTG the benefit of the doubt, but like the most of you, I will expect the worst. Unless of course they are really keen on bringing in a new foreign partner and not merely expect to make a profit from such a deal.

SMC also killed the LTG synergy from LTP to Macro Asia.

[swahi]

^^^ So now what?  As is routes with as is planes?

[chowpau]

I will wait what would be their battle plan

Read in the other forum posted by someone that PAL will cancel the 757. Cebu Pac might be smiling and might get the unused slot from PAL to Australia

[Evodesire]

Cebu Pacific must be smiling now that RSA is out of PAL. Deferment of the delivery of the A321s plus cancellation of the 757 interim aircraft... speaks a lot of PAL's future under the LTG.

NExt thing you know Cebu Pacific has made orders for A350s, 777s, etc for its US mainland expansion and yet, PAL under the LTG wouldn't be doing anything. If that scenario happens, I would not wonder.

[swahi]

LT did not have enough money to pay off RSA.  He borrowed 360M from BDO, 100M from China Bank, both of which got LT's PNB and LTG shares as collateral. He borrowed 70M from AUB, which is collateralized with LTG shares also, and PNB also loaned 250M, of which it is collateralized with property. This means at least 780M is from loans!  I am a businessman, and loans is part of business. Its called leveraging. But if you borrow money to pay off someone else, it does not contribute anything to the business!  And then he turns around and defers the new planes because it will mean paying the balance of the ordered planes, this just means he did not allocate enough funds for additional capital outlay!

I can understand if he didn't want the 757s and prefers something new, something more efficient.  But he cancels the old planes, defers the new planes.  We are left with nothing!

[seven13]

Any more good news left?

[Evodesire]

This is what puzzles me. First, LT and RSA were both present when PAL finalized the A321 and A330 orders. I am sure LT saw the terms, etc. After some time, LT wanted to let go of his remaining 51% on PAL. SMC was then looking for other partners/investors. RSA has also set long term goals for PAL, I am sure the Airbus orders were long term goals to fill in the short and mediul haul fleet of the carrier. Reason why they got a huge number.

Then all of a sudden, the LT group wants to buy back the 49% of SMC as PAL posted profits. RSA then named an amount and gave a deadline. If not, the SMC group will take the 51% of the LTG. LTG goes out and scrambles for money, making loans from different banks to be able to deliver the $1.2B to SMC. Then after, LTG defers Airbus orders and cancels the lease of 4 757s. On the wake of this buyout, 5J launches Sydney and Kuwait flights. And you see 5J aggressive marketing once again.

Why is SMC letting for of PAL just like that when it had placed jet orders even for its long term expansion? Why did LTG defer the Airbus orders when they were very much aware of its terms when they signed the purchase order?

LTG got shares in Cebu Pacific too? Political influences affecting Danding Cojuangco and Lucio Tan? Someone from the outside is forcing LTG to take over PAL as so not for ECJ to be in power?

This is quite getting crazy

[airboy007]

After buyout
Sep 11, 2014; 6:06pm — by  seven13 seven13
Any more good news left?

sadly, none.

[seven13]

Well, I read somewhere (maybe at the other site), in spite of canceling the lease for 757, MEL expansion will still push through although no definite plans written unlike SYD where we know that it'll go daily.

I'm still hoping for JED, DOH and MCT to go online. Just crossing my finger.

[Arianespace]

I just got a scoop WHY LTG has to buy back PAL now from SMC.

Because It would be difficult for them to get back control of the airline had they waited for another year as SMC plans to announce new long haul fleet orders. Be aware that SMC has been financing almost all the aircraft orders of PAL.

It was agreed in the beginning that both companies would fund new fleet acquisitions. At the end however it was mostly SMC money that is pouring in. Advances that is. I did recall why SMC investors were cautious to the idea.

So, there is this impending long haul fleet order by SMC which was flagged by LTG. Why was it stopped?  SMC was putting more money at PAL that eventually would put LTG in jeopardy, meaning SMC will have more investment at PAL than LTG could put up. LTG does not want to put more money in. Problem was SMC heads management so they have no recourse but to approve its plan for capital expenditures. After all Its in the management deal.

This would however put LTG in a bind because as the years progress more money is poured by SMC in the form of advances to aircraft orders. While the aircraft itself is funded by a loan, the bank requires equity shares for every aircraft orders delivered and that is where SMC money goes.

And the bottom line, While its investment ($500m) remain as it is, its advances ($750) however is growing by the year. If you can recall, SMC and LTG agreed to pool $1bn for aircraft acquisitions, $500 for SMC and $500 for LTG. The problem there was that the latter failed to provide its counterpart. So SMC covered for its shortfall and paid aircraft equity. By 2016 it would have been $800m. Two years after that It would have been very difficult for LTG to pay $1bn cash for SMC advances alone by 2018, and you add to that another $500m refund of their investment. And that is not counting another set of aircraft orders.

And I said "But of course". I did not see that coming.

[Evodesire]

So this means, LTG's plan is to do the buyout and then defer deliveries, cancel perhaps long haul aircraft orders which means that they cancel expansion and keep PAL stagnant?

This is what I don't understand. Why don't the LTG just sell PAL to SMC? Besides, SMC can make PAL grow whereas the LTG will just keep it as a sitting duck?

Well to sum things up, no matter how optimistic we want to be but seeing all these developments, is it safe to say that we may see the end of PAL in the next coming years should the LTG be in control again? Or maybe Cebu Pacific being our official carrier?