Philippine billionaire merges airlines to boost investor appeal

Philippine tycoon Lucio Tan will consolidate his airline ventures as he focuses on expanding his flagship PAL Holdings and increase its appeal to potential buyers. PAL will acquire another company owned by Tan called Zuma Holdings & Management Corp. through a share-swap agreement, valuing the whole deal at 8.24b pesos ($166m), the company said Friday. The purchase will consolidate Philippine Airlines Inc. and budget carrier Air Philippines Corp. “The integration of both businesses into a single organization structure would make PAL a more viable investment for interested investors,” PAL said. Consolidating the two airlines will also reduce costs and increase revenue, it said. Philippine Airlines is in talks with potential investors and is seeking one with experience in running carriers so it can help manage its fleet, the carrier’s President Jaime Bautista said in June. The company is also open to private equity funds and other strategic investors. The reorganization comes as competition intensifies among carriers in Asia Pacific, where a dozen new airlines started operations in the past decade.<br/>