Print
13
Sep

Tycoon Tan Says Philippine Air Profit Comes Before Stake Sale

Share

By Cecilia Yap | Bloomberg

Billionaire Lucio Tan said he plans to return his group’s Philippine Airlines Inc. to profit before selling a stake, two weeks after the carrier’s president said talks with a strategic investor were likely to produce a deal by the end of this year.

PAL Holdings Inc., the carrier’s parent, booked a net loss of 501 million pesos ($9.8 million) in the second quarter after reporting a 1.13 billion peso deficit in the previous quarter as higher fuel costs and aircraft lease charges boosted expenses. Tan, chairman of the LT Group Inc. conglomerate, spoke in an interview in Manila on Sept. 7, and didn’t elaborate on the airline’s plans to return to profit.

“I will not sell unless it earns money,” said Tan, 83. “Airlines are a very competitive business.”

Tan, the Philippine’s second-richest person, is vowing to revive profit at the carrier amid an increase in tourist arrivals in the country. Philippine Airlines has been acquiring new planes and expanding destinations and flight frequencies as rising income among Filipinos boosts travel.

“While PAL needs to get back to profitability, one thing that makes it attractive for investors is Philippine tourism is picking up, giving the airlines an earnings growth driver,” said Manny Cruz, an analyst at Asiasec Equities Inc.

Tourism Surge

Tourist arrivals in the Philippines rose 13 percent in the first half of the year to 3.36 million, according to Tourism Department data.

The LT Group chairman is seeking a strategic partner for the airline after buying San Miguel Corp.’s stake in 2014, taking control of the venture. PAL Holdings President Jaime Bautista said on Aug. 30. the airline has been in talks with a strategic foreign investor and wants to close the deal by the year’s end.

Tan, who also controls the biggest cigarette-maker in the Philippines, had a net worth of $5.9 billion as of Sept. 8, according to Bloomberg Billionaires Index. His wealth gained about 13 percent, or $651 million this year, boosted by a 39 percent advance in LT Group shares. The listed flagship is the holding company for his airline, banking, liquor, brewery, property and tobacco businesses.

‘Easy Life’

The LT Group chairman is also preparing to hand over the reins to the conglomerate, saying he has a succession plan in place.

He declined to say who would take the helm or when they would take over. Michael Tan, his son and LT Group president, is among the likely successors, along with Lucio “Bong” Tan Jr., the son who heads the group’s liquor-maker Tanduay Distillers Inc. and builder Eton Properties Philippines Inc. Son-in-law Joseph Tan Chua is president of MacroAsia Corp., an aviation-support provider and a partner of Deutsche Lufthansa AG.

“Tan is still relatively hands on compared with the other tycoons of his generation,” said Paul Michael Angelo, analyst at Regina Capital in Manila. “But we shouldn’t see a major disruption on operations arising from succession, as Tan has put in place key executives and delegated key management functions.”

Tan said he still gets up at 4 a.m. to play golf before a minimum eight-hour day running his conglomerate.

“I am old,” said Tan. “My wish now is for an easy, easy life.”

CAB Hotline

Public Assistance 24/7

165-66

Secondary Numbers

NAIA Terminal1 0919-9128457 Laguindingan 0919-9128468
NAIA Terminal2 0919-9128458 Laoag Airport 0998-5864834
NAIA Terminal3 0919-9128451 Legaspi Airport 0919-9128461
NAIA Terminal4 0919-9128470 Mactan-Cebu Int'l. 0919-9128464
Clark Int'l .Airport 0919-9128471 Naga Airport 0919-9128462
Boracay Airport 0919-9128453 Ozamis Airport 0998-5864835
Bacolod Airport 0998-5864828 Pagadian Airport 0998-5864836
Basco Airport 0998-5864829 Puerto Princessa 0998-5864837
Busuanga Airport 0919-9128460 Roxas Airport 0998-5864838
Butuan Airport 0998-5864830 Siargao Airport 0919-9128456
Davao Int'l. Airport 0919-9128469 Surigao Airport 0998-5864839
Dipolog Airport 0998-5864832 Tacloban Airport 0998-5864840
Dumaguete Airprot 0998-5864833 Tagbiliran Airport 0919-9128465
General Santos 0919-9128467 Tugeugarao Airport 0998-5864841
Iloilo Int'l .Airport 0919-9128466 Virac Airport 0919-9128463
Kalibo Int'l. Airport 0919-9128454 Zamboanga Airport 0998-5864842

✆ 852-8967 (CAB Legal and Enforcement Division)
APBR@cab.gov.ph

Trunk Lines:
☎ (+632) 853-7259
☎ (+632) 854-5996