PAL undertakes reorganization, eyes profitability in 2014

MANILA, Philippines - Diversified conglomerate San Miguel Corp. (SMC) is fine-tuning the management of Philippine Airlines (PAL) in its bid to fly the airline back into profitability starting next year.

A source from SMC revealed to The STAR that PAL president and chief operating officer Ramon Ang has tapped the services of a former official of United Airlines to serve as advisor on how to further improve the operations of the national flag carrier.

The source pointed out management is also undertaking reorganization with the early retirement of three key executives, including those in the airline’s sales and marketing departments.

Replaced were senior vice president for marketing Felix Cruz and Enrique Javier from the sales department.

The source revealed the heads of the sales and marketing departments agreed to retire one or two years earlier than their retirement age to allow the entry of officials from SMC.

“The retirement of two or three executives over the past few weeks is part of the ordinary course of business operations,” one of the sources said.

The SMC’s wholly-owned subsidiary San Miguel Equity Investments Inc. (SMEII) had acquired a 49 percent equity interest in Trustmark Holdings Corp. for $500 million in April last year.

Trustmark owns 97.71 percent of the airline’s parent firm, PAL Holdings, which in turn owns 84.67 percent of PAL through PR Holdings Inc.

In all, SMC bought a 49 percent interest in PAL while tobacco and airline magnate Lucio Tan retained a controlling stake of 51 percent. Tan remains chairman and chief executive officer of PAL.

Ang earlier said PAL is confident it could return to profitability in 2014 with its ongoing re-fleeting program as well as the impending lifting of the ban on local airlines to fly to Europe and to mount additional flights to the US.

“By next year, PAL will earn money,” Ang stressed.

He pointed out the airline hopes to cut by half its losses this year on the back of the acquisition of fuel efficient aircraft as well as the introduction of additional long-haul routes.

The airline’s parent firm PAL Holdings Inc. trimmed its losses by 24 percent to P2.74 billion in the first nine months of its fiscal year, from P3.59 billion as total revenues climbed by 2.4 percent to P55.68 billion from P54.38 billion on the back of higher revenues from its passenger and cargo businesses.

PAL is in the midst of a major re-fleeting program aimed at acquiring 100 new aircraft.