The PAL-LTP Transactions: At a Glance

Documents signed:


Q Asset Purchase Agreement


The sale of Philippine Airlines’ maintenance and engineering facilities and other properties to Lufthansa Technik Philippines (LTP), a joint venture of Lufthansa Technik AG and MacroAsia Corporation.


Q Technical Services Agreement


The engagement by PAL of LTP as its exclusive provider of maintenance, repair and overhaul services for aircraft, engines and components for a period of ten years.


Subject of the PAL asset sale:


Q Four-bay hangar located at the Manila International Airport Authority complex in Pasay City, Metro Manila, including all structures and improvements

Q Engine overhaul building and improvements

Q Maintenance hangar located at the Mactan-Cebu International Airport Authority complex in Cebu

Q Ground support equipment

Q Vehicles

Q Tools

Q Others (intellectual property rights, assumed contracts, books and records)


Rationale for the sale:


The sale of the M&E facilities is mandated by PAL’s rehabilitation plan. It will enable PAL to:


Q Reduce maintenance costs and overhead

Q Improve the quality of fleet maintenance to enhance efficiency and on-time performance

Q Transfer risk in managing a sophisticated maintenance, repair and overhaul operation to a more qualified, financially secure partner

Q Be relieved from critical capital investment for upgrading the facility

Q Raise cash to prepay creditors and reduce interest burden

Q Avert deteriorating quality of M&E operation due to skilled work force attrition

Q Gain greater flexibility to focus on the airline’s core business


Benefits of LTP’s investment to the Philippines:


Q Establishment of a world-class aircraft maintenance, repair and overhaul facility in the Philippines

Q Creation of employment opportunities for highly skilled Filipino mechanics

Q Improvement of safety standards for domestic air transportation

Q Generation of foreign exchange for the country

Q Promotion of tourism and export industries