Philippine Airlines (PAL) chairman and majority owner Lucio Tan has said that he is considering selling his stake in the troubled carrier.
PAL says Tan has notified the carrier's board of his intention to withdraw completely, although no serious action has been taken. Tan owns a 53.79% stake in the carrier and is close to a consortium of investors holding 35.15%.
Tan, a beer and tobacco magnate, is not popular within the airline or within the Philippine industry as a whole. Many blame him for allowing the once- proud national carrier to fall into its state of near bankruptcy over the past two years as a result of mismanagement, an over-ambitious desire to expand and disastrous employee relations. PAL was placed in receivership in mid-1998 after a damaging pilots' strike and was forced to cut back radically on its fleet, route network and employee base simply to survive.
Many also accuse Tan, who has close ties to Philippine president Joseph Estrada, of having too much control over the country's aviation sector. He is widely reported to have taken over major domestic operator Air Philippines last year and is thought to be closely linked to dedicated freight operator Pacific East Asia Cargo. Tan's close connections to the government, critics say, have stymied growth in the local industry and forced a number of ambitious groups to drop plans for new start-up carriers.
Reports from the Philippines have said that Tan wants around $800 million for his shareholding in the airline and local media have identified Lufthansa as a potential buyer - but the German carrier denies that talks have been held. The German group's engineering arm Lufthansa Technik is said to be nearing a deal to purchase PAL's maintenance unit, however, and Lufthansa Consulting has an advisory contract with the Filipino airline.
* Lufthansa and PAL have signed a block-space agreement allowing PAL to sell space on the German carrier's dedicated cargo flights between Frankfurt and Manila.
The agreement gives PAL a presence in the European cargo market for the first time in nearly two years.
Source: Airline Business
