Manila-based San Miguel is looking to invest $500 million in a leasing platform, which would facilitate Philippine Airlines’ (PAL) aircraft financing plans through operating leases.
The lessor would be “partly owned” by the carrier, a source familiar with the situation indicates.
“In Asia, San Miguel is absolutely massive with deep pockets, but $500 million is a chunk of change for the conglomerate,” says an Asian aviation financier, regarding the plans.
The move follows closely on the heels of Norwegian’s new Irish leasing entity, September Aviation Assets, which will concentrate on the carrier’s new Boeing 737-800 deliveries.
The first aircraft delivery to be placed under the control of the fully-owned asset management company is due later this month.
According to a leasing source, both airlines are looking to take advantages of tax and accounting privileges afforded to them under a leasing umbrella.
Norwegian indicates its new leasing subsidiary will help limit currency exposure on the carrier’s balance sheet.
The currency exposure is primarily driven by a mismatch between US dollar-denominated loans and aircraft balance sheet values denominated in the Norwegian krone, currently managed by “extensive” hedge arrangements, says the airline.
Last year San Miguel made a $500 million investment in PAL and its low-cost partner Air Philippines, effectively giving it a 49% stake in the carriers that was reduced to 44% following a share issue in July.
PAL’s other major shareholder is Lucio Tan, who earlier indicated he was looking to offload his remaining 51% stake.