San Miguel eyes Philippine Airlines buyout

Philippine conglomerate San Miguel said Thursday it hopes to take full control of the country's flag carrier within two months by buying out its local partner. San Miguel in 2012 bought a 49 per cent stake in Philippine Airlines (PAL) US$500 million from LT Group, a holding firm controlled by tobacco tycoon Lucio Tan.

In a statement to the stock exchange San Miguel confirmed local news reports that its president Ramon Ang and PAL were "hopeful" it could buy out the rest of the carrier's shares by the end of September. PAL issued an identical statement to the exchange. Ang and the LT Group had earlier disclosed they were in talks over a possible buy-out of the airline, whose parent PAL Holdings suffered a net loss of US$205.15 million in the nine months to December 2013.

The airline's prospects have improved since the US Federal Aviation Administration removed the Philippines from its air safety blacklist in April, opening the door for Filipino carriers to expand services to the United States. The FAA decision came after the European Union in July last year lifted its own ban on PAL following an upgrade of safety standards. Under Ang, San Miguel, originally a Southeast Asian beer and food giant, has diversified into a wide variety of fields including infrastructure, energy and oil refining.

SOURCE

Philippines expects to be lifted from US air blacklist

The Philippines expects to be removed from a US air safety blacklist this year, opening a lucrative market for its carriers, an aviation regulator said Thursday.

John Andrews, deputy director-general of the Civil Aviation Authority of the Philippines (CAAP), said he was very confident the upgrade would occur following a similar decision by the European Union last week.

"We're going to make it. (It's) as simple as that," Andrews told AFP in an interview.

The US Federal Aviation Administration said in 2008 that the Philippines was failing to comply with international safety standards, and banned its airlines from expanding services to the United States.

The European Union banned all Philippine carriers from flying to Europe in 2010 for similar reasons.

Reforms put in place since then, including a law creating a new aviation regulator, the CAAP, allowed the Philippines to satisfy the concerns of the International Civil Aviation Organization (ICAO) in February.

This led to the EU's decision last week to allow Philippine Airlines to begin flying into its airspace. The EU said it was reviewing the case of other Filipino carriers.

Andrews said he expected US aviation regulators to make similar findings when it carried out an audit before the end of the year.

He said Filipino regulators had addressed safety concerns by physically tracking down every aircraft registered in the Philippines and getting their owners to submit documentation.

This was to make sure the CAAP stopped the illegal practice of cannibalising old aircraft to supply parts for planes of the same make that were still flying, he said.

He said the CAAP also had to update records on the air-worthiness of all civilian aircraft serving Philippine airspace.

Andrews said the law that created the CAAP, also in 2008, allowed it to offer higher salaries than other government agencies to its air safety inspectors.

This was important so the inspectors, now being paid more than triple their 2008 salaries, could resist bribes to certify all aircraft as air-worthy.

Andrews said that apart from Philippine Airlines, other local carriers such as Cebu Pacific wanted to fly to the United States.

"They will all compete because it's a rich market," he said.

SOURCE

After the EU, PAL is hoping the US will also clear it to fly into their airspace when the audit is being carried out later this year. The next step for them is probably to purchase more aircraft to meet this surge in demand.

European Union lifts safety ban on Philippine Airlines

The European Union has lifted a three-year ban on Philippine Airlines flying into its airspace after the national carrier addressed safety concerns, the EU's ambassador to Manila said on Wednesday.

PAL will be allowed to fly into the 28-member bloc from Friday, which will spur tourism and business links, ambassador Guy Ledoux said.

"This is a tremendous achievement in such a short period of time," Ledoux said.

He added that the EU would conduct further reviews so other Philippine carriers would also be able to fly to Europe as well.

"This decision is very encouraging and is the first success of CAAP (Civil Aviation Authority of the Philippines) and Philippine Airlines," he told reporters.

"EU-Philippines trade and investment relations will benefit from the lifting of the air ban," Ledoux added.

He remarked that even without direct flights, European tourist arrivals to the Philippines rose by about 10 percent last year to 349,000 and expressed hope that the lifting of the ban would boost this even further.

CAAP director-general William Hotchkiss said raising safety standards had required "superhuman effort" including recruiting veteran talent.

He also expressed confidence that by the end of the year, the US Federal Aviation Administration would lift a similar ban that restricts Philippine carriers from expanding operations to the United States.

PAL president Ramong Ang told reporters at a joint press conference with Ledoux that the carrier planned to begin flights to London, Paris, Rome and Amsterdam by September or October.

He said PAL could compete with lower-cost Mideast airlines in serving those routes because it would offer non-stop flights.

PAL is already entitled to seven flights a week to London and at least six flights a week to Paris, Ang said.

He said the airline would enter into negotiations for the other destinations.

Ledoux said the safety ban on other Philippine carriers may also be lifted amid a general improvement in the country's aviation standards and positive work by the CAAP.

However he said that the EU ban on Cebu Pacific, a second major Philippine carrier, had been maintained because of an incident last month where a Cebu Pacific plane skidded off a runway while landing in the southern Philippine city of Davao.

He said this "unfortunate recent accident in June... shows some weaknesses need to be addressed."

None of the 165 people aboard the plane were hurt but CAAP later suspended the two pilots involved and harshly criticised Cebu Pacific for safety lapses.

Ledoux said the European Commission was encouraged by the actions being taken by CAAP and Philippines air carriers to address outstanding safety issues and would continue to monitor the situation closely.

Cebu Pacific said in a statement that it hoped to take part in the next EU air safety commission meeting later this year and continues to look at opening services to "parts of Europe and the US".

The EU announced in March 2010 that it had banned all Philippine airlines from flying into Europe for "serious and persistent non-compliance" with the bloc's air safety rules.

The US issued its ban on the Philippines expanding its operations in 2008.

SOURCE

This is good news for PAL. They're now able to extend their network into EU airspace. However, the ban continues for Cebu Pacific after they failed to react adequately to a crash weeks ago.