PAL Holdings Inc., the operator of Philippine Airlines, is reviewing investment plans in Cambodia Air, after it deferred twice the completion of the joint venture with Inter Logistics (Cambodia) Co. Ltd.
“We are reviewing when to start [investing] and whether that project is still viable. We have delayed it because of the situation there,” PAL Holdings president and chief of operations Ramon Ang said.
PAL said earlier it teamed up with Royal Group of Cambodia to establish its first international airline venture known as Cambodia Airlines. PAL was supposed to invest $10 million in Cambodia Air for a 49-percent interest in the company.
The flag carrier, under the agreement, would own a 49-percent stake in Cambodia Airlines while RGC, headed by Neak Oknha Kith Meng as chairman, would own the remaining 51 percent.
Inter Logistics (Cambodia) currently owns 100 percent of Cambodia Air. PAL is a joint venture between San Miguel Corp. and business tycoon Lucio Tan.
The 10 percent downpayment was supposed to be paid on July 15 last year, while the balance would have been settled upon call of the board of directors of Cambodia Air.
Cambodia Air will initially fly to regional destinations as well as domestic routes in Cambodia.
The deal was estimated to give PAL revenues of $300 million to $400 million.
PAL said earlier it would deploy 16 to 22 aircraft worth $1.5 billion to equip the fleet of Cambodia Airlines.
Of the 22 aircraft, 10 will be delivered in the first year of operation while the remaining will be deployed in the second year, PAL said.
The flag carrier has recently transferred its domestic operation to sister unit PAL Express, leaving only Cebu and Davao in its network as it aimed to re-establish its leadership in the aviation sector and make its operations more competitive and profitable.
It is undergoing major refleeting program involving 100 aircraft to modernize the fleet, increase the regional and international route networks, and invest in aviation infrastructure.
The refleeting program will consist of more than 65 A321s and over 20 A330s, which will be delivered over the next three years.
PAL expects 18 aircraft from Airbus to be delivered this year.