Philippine Airlines (PAL) will invest $10 million to acquire a 49% stake in Cambodia Airlines.
The investment will be made through a joint venture transaction with Cambodian firm Inter Logistics, which owns 100% of Cambodia Airlines. PAL's board of directors approved this move on 25 April, PAL said in a statement on the Philippine Stock Exchange.
The transaction is expected to be completed by 15 July, when PAL will make a 10% downpayment, it adds.
Once complete, PAL will own 49% of Cambodia Air while Inter Logistics will hold the remaining 51%.
Inter Logistics is 100% owned by The Royal Group chairman and chief executive Kith Meng.
"The rationale for the transaction is to establish a national carrier for Cambodia, contributing to Cambodia's economic growth," says PAL.
In a separate stock exchange filing, PAL also confirmed that it will be deploying between 16 to 22 aircraft to the joint venture airline. In the first year alone, PAL will likely deploy up to 10 aircraft to the carrier.
PAL's president Ramon Ang says that the joint venture deal is likely to boost PAL's revenues by up to Philippine peso (Ps) 400 million ($9.6 million).
PAL has 65 aircraft - 34 Airbus A321s, 10 A321neos, 20 A330-300s and a Boeing 777-300 - on order. A source had earlier told Flightglobal Pro that Cambodia Airlines will likely operate A321s on domestic and regional routes.
Cambodia Airlines will compete with flag carrier Cambodia Angkor Air, which is majority owned by the local government, with Vietnam Airlines holding a 49% stake.
Several airlines have started operations in Cambodia in recent years, only to shut them down after heavy losses. An airline similarly named Cambodia Airlines was dissolved in 2005, although it is unclear whether it has any links to the upcoming carrier. Cambodia, however, has a fast growing economy and rising passenger numbers.