Manila: Philippine Airlines chairman and owner Lucio Tan reportedly allowed San Miguel (food and beer conglomerate) Corporation president Ramon Ang to fuse $500 million for the re-fleeting of the country's oldest flag carrier, acquiring in the process 49 per cent share in the losing company, sources said.
San Miguel's investment also included control of minority share in Air Phil Express, PAL's low-cost airline, said the same source who requested for anonymity.
Although Tan retained PAL's majority of 51 per cent, he gave up PAL's management to San Miguel, reducing himself to a figurehead chairman.
San Miguel's $500 million investment would give PAL Holdings, PAL's parent, a market value of P 42.55 billion ($ 1.013 billion). Both Tan and Ang did not confirm the reported deal.
But PAL spokeswoman Cielo Villaluna confirmed the deal's signing. She did not reveal financial details.
San Miguel will make its newly acquired Petron as the major source of PAL's aviation fuel, said Interaksiyon, the online portal of Channel 5.
But the merger remained verbal, San Miguel chief financial officer Ferdinand Constantino also told Interaksiyon.
There were reports that Tan had asked Many Pangilinan of Smart telecom firm, Manila Electric, and Channel 5, to invest $700 to $ 750 million for 75 per cent ownership of PAL and Air Phil Express, leaving the PAL owner a small 25 per cent.
San Miguel and Pangilinan have been expanding robustly to other business interests.
In comparison, Tan has been merging with other companies. His Fortune Tobacco became part of Philip Morris in 2010. PAL reported a net loss of $33.5 million in the last quarter of 2011.
Last year, PAL suffered ground a crew strike after it announced plans to outsource work of 2,600 ground crewmen in charge of catering, reservation, and other services.
It also cut hundreds of flights for a month last year due to strikes and PAL's pilots leaving for better paying jobs abroad.
PAL has been overtaken by rival Cebu Pacific which offers low-cost domestic flights.