PAL to infuse $10 M in Cambodia Air

MANILA, Philippines - National flag carrier Philippine Airlines (PAL), a joint venture between taipan Lucio Tan and diversified conglomerate San Miguel Corp. (SMC), is pumping in $10 million worth of equity for a 49 percent stake in Cambodia Airlines Co. Ltd.

PAL Holdings Inc. assistant corporate secretary Ma. Cecilia Pesayco informed the Philippine Stock Exchange (PSE) that the national flag carrier is spending the amount to buy a 49 percent interest in Cambodia Air that is 100 percent owned by Inter Logistics (Cambodia) Co. Ltd. (ILC)

ILC is 100 percent owned by Royal Group of Cambodia (RGC) chair Neak Oknha Kith Meng.

Pesayco said PAL would make a downpayment of 10 percent or $1 million of the total acquisition cost on the completion of closing conditions targeted on July 15 while the balance of $9 million would be paid upon the call of the board of Cambodia Air.

She pointed out that closing conditions include the registration of the investment of PAL in Cambodia Air as well as the procurement by Cambodia Air of all the necessary franchises, permits, and licenses to operate and maintain an airline company.

Cambodia Air should be a flag carrier entitled to traffic rights and slots under bilateral agreements between Cambodia and other countries.

Pesayco said PAL’s board of directors approved the investment in Cambodia Air last April 25.

Early last month, PAL president and chief operating officer Ramon S. Ang went to Phnom Penh to sign the joint venture agreement with Kith Ming formalizing PAL’s first international airline venture.

Cambodia Airlines would compete with Cambodia Angkor Air controlled by the Cambodian government in a partnership with Vietnam Airlines.

Ang earlier said PAL would deploy 16 to 22 aircraft worth $1.5 billion to equip the fleet of Cambodia Air of which about eight to 10 would be deployed within the first year of its operations.

The PAL chief said the joint venture in the new airline would boost PAL’s revenues by $300 million to $400 million.

Phnom Penh International Airport handled 2.08 million passengers in 2012, a growth of 13 percent year on year. Phnom Penh’s airport, as well airports in the tourist towns of Siem Reap and Sihanoukville, is operated under concession by Cambodia Airports.

The operator, which is majority-owned by French infrastructure giant Vinci Group, is spending nearly $150 million on doubling the capacity of both airports to handle five million passengers each a year by 2015.

SMC infused $500 million in April last year after Trustmark Holdings entered into investment agreements with SMC’s San Miguel Equity Investments Inc. (SMEII) for a 49 percent stake in PAL Holdings.