Sabin Aboitiz’s bet

“Finally!” said an excited Sabin Aboitiz, president and CEO of Aboitiz Equity Ventures, when I bumped into him recently at Cebu Pacific’s grand celebration of its historic aircraft purchase.

It was his reply as I congratulated him for the recent awarding of the contract to operate Laguindingan Airport to AEV’s infrastructure arm Aboitiz InfraCapital (AIC).

Sabin, or SMA as he is known in the business community, was all smiles and visibly relieved because finally, indeed, after two administrations, the Aboitiz Group bagged a much-coveted airport deal from the government.

While the group is now in charge of the multi-awarded Mactan-Cebu International Airport, this was made possible through an acquisition of the Edgar Saavedra-led consortium operating the Cebu airport.

It was a long time in the making, indeed for the Aboitiz Group and even Sabin recalled it with a tinge of frustration.

The Cebu-based Aboitiz Group, like other Philippine conglomerates, has long been eyeing to have an airport in its portfolio.

The group’s airport journey goes as far back as the time of president Noynoy Aquino, Sabin said.

Way back in 2013, it was also part of a group which was among seven bidders that prequalified for the P17.5-billion MCIA deal, which was bagged by Saavedra’s Megawide and partner GMR.

The Aboitiz Group then targeted other regional airports, namely the Iloilo International Airport, the Bacolod-Silay Airport, the New Bohol International Airport and the Laguindingan Airport in Misamis Oriental.

The upgrade of the four airports was supposed to be a public-private partnership during the Aquino administration but it did not materialize.

During the Duterte administration, Aboitiz also didn’t get an airport deal, not even as part of the super consortium of conglomerates vying for the Ninoy Aquino International Airport.

But the sweet taste of victory finally came last week for Sabin when AIC received the notice of award (NOA) to upgrade, operate and maintain the Laguindingan Airport.

The Department of Transportation and the Civil Aviation Authority of the Philippines issued the NOA last Sept. 30, with the official signing of the concession agreement slated by the end of October 2024.

What does this mean for the Aboitiz Group?

It means that its dream to build a portfolio of airports is finally coming to fruition.

Furthermore, the expansion in Mindanao solidifies its position as a key player in the Philippine aviation sector.

As AIC president and CEO Cosette Canilao said, the deal marks another major step in the company’s Airports Platform.

She is optimistic as they pursue further opportunities with other regional airports.

What’s the plan for Laguindingan?

The Aboitiz Group aims to modernize and transform the airport into a world-class gateway that will boost connectivity, tourism and economic growth in Northern Mindanao.

Laguindingan Airport is Mindanao’s second busiest after Davao City’s Francisco Bangoy International Airport and AIC’s proposed P12.75-billion project involves extensive development, including renovating and expanding existing facilities.

“These expansions are expected to enhance the passenger experience, improve operational efficiency and elevate the airport’s safety and security standards, aligning with AIC’s vision of creating globally competitive airports that showcase the best of the Philippines,” AIC said in a separate statement.

A busy techglomerate

Clearly, the Aboitiz Group under the leadership of Sabin Aboitiz has been one busy group. It has been aggressively expanding, with its different business units sealing deals left and right, including the acquisition of Coca-Cola Beverages Philippines Inc. with partner Coca Cola Europacific Partners; the LNG deal with Meralco PowerGen Corp. and San Miguel Global Power; the acquisition of CitiGroup’s consumer business; the acquisition of an additional stake in STEAG State Power and several other deals.

Sources also told me that the group had to implement three rounds of reorganization, starting in 2020, something Sabin later on confirmed to me.

The first round was the biggest and it involved C-level executives. Insiders said this was part of the usual reorganization as Sabin launched the so-called Great Transformation program when he took over the conglomerate in 2020.

Part of that program was the devolution of many functions from AEV, the holding company, to the different business units. Thus many redundant positions were cleared.

The second round involved quite a number of expats employed by the group. When their contracts expired, they were no longer renewed and instead were replaced by Filipino executives.

Another round involved clearing some more redundancies.

Clearly, since taking the helm of Aboitiz, Sabin has set the stage for the conglomerate to become the techglomerate he envisioned it to be.

Laguindingan Airport is part of the group’s broader strategy to develop and manage infrastructure assets that enhance connectivity across the Philippines.

Tycoons and airports

But it’s not only Sabin who targeted having an airport deal.

Other tycoons also bagged airport concession agreements while some are currently working to get their own.

This comes as no surprise because an airport business can be lucrative, especially with revenues from non-aviation segments – from food stalls to duty-free shops.

Plus, unlike other infrastructure investments, proponents don’t need to deal with right-of-way issues.

For the riding public, however, I hope that we all benefit from the privatization of our airports. I hope this brewing competition among airport tycoons would translate to better services.

*      *      *

Email: [email protected]. Follow her on Twitter @eyesgonzales. Column archives at EyesWideOpen on FB.