Making the bull the scapegoat?

In the world of real investors, people and organizations who are highly aggressive about an investment or company are referred to as the “Bulls” as in bullish, charging in and confident about their charge. Unfortunately in the Philippines, a country that has made the concept of “crab mentality” a cultural fact, “bulls” are sometimes made the Scapegoat.

Take for instance the statements coming from the new/old PAL president Jimmy Bautista claiming that their previous partners and business lifesavers San Miguel Corporation led by Ramon Ang allegedly bought too many planes and that the stated profits made during the SMC term of management reflected “peak seasons” and thereby suggesting that those profits were not accurate, if not insignificant.

To be totally honest, I was quite shocked and could not believe that the returning PAL president Jimmy Bautista would make such statements or suggestions that were posted by Rappler. In the few times I’ve talked or watched Bautista, I’ve known him to be circumspect, polite and very diplomatic. So I found his comments equivalent to digging one’s heels on the toes of your last dance partner. There is of course the possibility that Jimmy Bautista may have been nursing a heretofore unknown grudge with Ramon Ang and San Miguel because their takeover did put him out to pasture and made him look like a weak leader lacking vision, compared to how Ramon Ang led the charge for PAL’s recovery under SMC.

Whatever grudge there may be involving Mr. Bautista or the Tan group for that matter, it seemed silly to hang whatever dirty linen there was concerning the alleged over purchase of aircraft and peak-only profits. For one, digging your heels on someone still closely associated with the brand and admired for the major changes and accomplishments he made for PAL, is equivalent to spitting into the wind and spitting at your self. Blame throwing in public as your first interview and major media statement upon coming back into office makes one look petty and quarrelsome and does not add value or confidence to the brand.

When I asked around about the allegation that Ramon Ang made too many unnecessary aircraft purchases, the recurring reply from SMC and members of media familiar with PAL and the Tan group was one of disbelief. Every business reporter and columnist knew or heard about the ambitious re-fleeting program. It is also common knowledge that all programs and proposals pertaining to operations and aircraft purchases of PAL all go through the Board of Directors, all of whom as mentioned in my last PAL column belonged to or were placed by Lucio Tan himself. So it follows that both Lucio and Michael Tan had full knowledge of the plans and purchases. If I remember correctly Mr. Tan personally signed the contracts with the aircraft manufacturers. So why didn’t the Tan group block the re-fleeting considering they were the majority stockholder?

I suspect that Ramon Ang the “bull” has now become the preferred “scapegoat” because he often chooses to be quiet when being attacked or criticized. When some operators bad mouthed him and spread nasty rumors during his PAL stint, Ramon Ang chose not to fight back or speak on the attacks because he believed it would affect the company and destabilize its growth.

So why the need for a scapegoat? For starters, there are several million dollars worth of planes being delivered at the end of the year all the way into 2016. The SMC management team back then had no worries ordering the aircraft because they as investors had cash flow and money power to meet the delivery as well as plans to operate or lease the aircraft as needed. With SMC out of the picture and with a $300 million bridge financing that will allegedly mature at the end of the year, the Tan group has no choice but to prioritize their BDO loan or lose majority shares in PNB. 

By saying Ramon Ang ordered too many planes and that the company did not really make as much profit as the SMC team claims, PAL is clearly trying to get out of a sticky situation with their aircraft suppliers, something I doubt will fly with the plane makers because those planes were manufactured for PAL and don’t come off the shell. At the very least, I think PAL will have to pay penalty for not honoring their signatures. But what worries me is the possible repercussion of their “stop buying” policy. Although no one talks about it, many people will concede that being allowed to fly into Europe and the US was influenced by the bulk purchase of “safe” aircraft made by European and American companies that actively helped PAL and the Philippines to be allowed back to Category 1 operations.

If the manufacturers end up losing 50% of the orders, they will surely call on their governments to either exert pressure for PAL to fulfill their commitment or for the EU and US to take back concessions and commitments given to the national flag carrier. In other words, If PAL can be an “Indian Giver” so can the EU and the US. This however may eventually become moot and academic as PAL president Jimmy Bautista has been quoted or labeled as clipping PAL’s wings upon retaking his seat.

As a lecturer on media and communications, I have to say that Jimmy Bautista’s opening salvo for his balik PAL program has blown up on PAL because what many people were looking for were reassurance that the confidence building programs initiated by the SMC group would continue and further improved. People don’t like to see hanging laundries on condominiums and they certainly don’t like to know about it in corporations.

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