Tanduay Holdings defers acquisition of airline business

Tanduay Holdings Inc. has deferred the acquisition of the airline business until such time it can maximize the full potential of it.

In a disclosure to the Philippine Stock Exchange, Tanduay said it is postponing the infusion of the airline business into the company’s books but would proceed with the acquisition of up to 100-percent equity stake in Fortune Tobacco, Asia Brewery, Paramount Land Equities, and Saturn Holdings.

The acquisition of additional shares will be paid from the proceeds of the five billion share subscription that was recently approved and completed.

The acquisition of these assets is in line with Tanduay’s reorganization into a holding company for various businesses of taipan Lucio Tan.

Tanduay was supposed to acquire Tan’s 49.84-percent and 50.97- percent shareholdings in Philippine Airlines and unit Air Philippines, respectively, as part

of the consolidation of most of his assets which include Eton Properties, Asia Brewery, Philippine National Bank and Allied Bank.

Tan still owns half of PAL and Airphil after selling the other half to diversifying conglomerate San Miguel Corp. in April.

“The LT Group feels that the timing to include the airline business should be done at a later date when PAL’s business model is working or when it is profitable already,”said the source who did not want to be named.

For its fiscal year ending March 2012, PAL incurred a net loss of P4.29 billion, a reversal of the P2.99 billion loss incurred in the previous year. Revenues were flat at P74.05 billion.

PAL is embarking on a $1 billion expansion program as it plans to further widen its global footprint to include the Middle East, Europe and Australia. It plans to acquire up to 100 brand new aircraft in line with its bid to reclaim the top slot in the local airline sector.

Meanwhile, Tanduay said its unaudited combined net income amounted to P5.7 billion in January to September this year on revenues of P20.8 billion.

The consolidation will align all Tan assets under one roof, thereby allowing the group to leverage emerging opportunities in different sectors and provide better realization of value for investors.