Philippine Airlines’ chief Bautista abruptly retires

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Philippine Airlines (PAL) announced the surprise retirement of president and chief operating officer Jaime Bautista earlier this week. The well-regarded Bautista wants to spend more time with his family after 26 years with the airline, according to a PAL statement.

Bautista’s retirement, approved by the PAL board on Monday and effective 30 June would, many expected, would pave the way for the succession of Vivienne Tan, daughter of the airline’s billionaire owner Lucio Tan, to take the helm of the carrier. Lucio Tan is the Philippines’ seventh richest individual with a net worth of USD 3.8 billion according to Forbes.

Jaime J. Bautista PAL
Jaime J. Bautista

The announcement comes only weeks after PAL Holdings, the listed holding company of Philippine Airlines, held an annual shareholders meeting 30 May at which Bautista was reappointed as both president and director while Vivienne Tan was named treasurer.

In the statement this week, it’s not made clear that the Vivienne Tan will be permanently taking over the helm, with the statement only saying: “PAL Executive Vice President / Treasurer and Chief Administrative Officer Vivienne K. Tan is working closely with the outgoing PAL President for a smooth and orderly transition.”

According to travel website, Skift, the carrier will now seek a replacement for Bautista from outside the carrier, with the requirements that the new prospective candidate be Filipino and has airline management experience, the website says quoting unnamed sources.

The airline, Asia’s oldest and formerly one of the largest airlines in the region was placed into receivership in 1998 following the 1997 Asian financial crisis. At that time PAL was forced to downsize its international operations by cutting flights to Europe and Middle East and cutting virtually all domestic flights except routes operated from Manila, reducing the size of its fleet, and laying off thousands of employees.

After PAL’s exit from receivership in 2007, PAL embarked on a frequent revamp of management as it struggled to regain its former glory. In 2012 Philippine conglomerate San Miguel Corp. bought 49 per cent of PAL’s parent, PAL Holdings, for USD 500 million with San Miguel’s vice chairman, president and COO, Ramon S. Ang taking over as PAL president and coo, ousting Bautista from his position.

In what is said to be conflicts between Tan and Ang, San Miguel Corp was asked to sell back its share in the airline in 2014, which insiders say San Miguel agreed to, but gave Tan only one week to raise USD 1.0 billion to re-acquire the stake, which he ultimately did.

The departure of San Miguel’s investment and Ang as president and COO, saw the return of Bautista to the position.

Many insiders credit Ang with being key to PAL’s turnaround, which saw a fleet modernisation plan that is still unfolding to this day. Currently the carrier has a fleet of 71 aircraft including A320 family narrow bodies, A330s along with 10 B777s and six A350s. The airline operates a network with destinations in Asia, North America, Oceania, Middle East, and the UK.

In 2016, Bautista announced a five-year strategy to turn the airline, then rated at three stars, into a five-star carrier. Skytrax upgraded the airline’s rating to four stars last year. He also led a years-long search for a strategic shareholder, which ended this year in the sale of a 10 per cent stake to Japan’s ANA Holdings.

But while efforts to boost the carrier’s standing, the carrier came under pressure from Philippine President Rodrigo Duterte, who in 2017 threatened to close PAL’s main Manila airport terminal unless the airline paid PHP 6.0 billion (USD 117.2 million) worth of back taxes.

PAL’s problems, have over the years, also been compounded by the growth of low cost carrier, Cebu Pacific – now the the largest Philippine-domiciled carrier – that rapidly grew in the liberalised Asian aviation market.

The carrier now has a fleet of 54 aircraft – mostly narrow body, alongside eight A330-300s – with orders for 65 more aircraft, including 16 A330-900neo. Cebu Pacific currently flies to 37 domestic destinations and 27 international destinations in 15 countries across Asia Pacific.

The airline is a subsidiary of JG Summit Holdings headed by Lance Gokongwei, presumptive heir of John Gokongwei, the chairman emeritus of JG Summit.

The elder Gokongwei has a net worth of USD 4.4 billion making him the third richest individual in the Philippines according to Forbes.

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