Diversified conglomerate San Miguel wants to expand its airline business via a regional acquisition and by growing its fleet as it seeks to reclaim the top position its unit Philippine Airlines lost to budget carrier rivals.
Ramon Ang, president of both San Miguel and Philippine Airlines (PAL), said the carrier was looking to invest in a regional airline and restructure its operations to become a low-cost carrier.
San Miguel acquired minority stakes in PAL and its affiliate in April in a deal worth about USD$500 million, the conglomerate's first foray into the airline business. After the deal was signed, San Miguel took over management control of the airline.
"At the moment, there are several opportunities for PAL to acquire some other companies in the region for us to have good synergy," Ang told reporters after San Miguel's annual shareholders' meeting.
He also said the airline was in talks with aircraft manufacturers as it aims to beef up its current fleet by adding at least 100 new planes in the next five to seven years. A local newspaper said in April the firm might spend USD$500 million to USD$1 billion on its refleeting.
Eduardo Cojuangco, San Miguel chairman, said the new management was targeting Asia's oldest airline to "be in the black in two years time".
"The immediate task at hand, after putting in place an efficiency plan that will lower operating cost, is to differentiate and reposition PAL," he told the stockholders.
Philippine Airlines has suffered from high jet fuel prices in recent years and tough competition from its main rival, budget carrier Cebu Air.
RECORD SHARE ISSUE
Ang also said San Miguel plans to sell up to PHP80 billion pesos (USD$1.9 billion) of perpetual preferred shares in September in what would be the biggest capital raising by any private corporation locally, to refinance costly preferred shares.
The country's largest conglomerate was still studying whether to launch a single or multi-tranche offer, Ang said.
It had issued PHP72 billion pesos worth of preferred shares to stockholders, including the government, in 2009.
San Miguel told the stock exchange it was contemplating an issue of Series 2 preferred shares and an increase in its capital stock, but did not give an amount.
The group has spent at least USD$3 billion since 2007 for its aggressive acquisitions away from its traditional food and drinks businesses and into sectors such as energy, telecoms, mining, banking, infrastructure and airlines.