The sudden departure of Philippine Airlines (PAL) president and COO Jaime J. Bautista caught the industry by surprise.

While in Paris on Tuesday accepting the Skytrax Award for Most Improved Airline for 2019, PAL announced that Vivienne K. Tan, daughter of PAL chairman Lucio C. Tan, would head the airline as officer in charge as Bautista retires.

The statement said the elder Tan and members of the PAL board had accepted Bautista’s retirement “after he expressed his desire to spend more time with his family.”

Insiders, however, intimated that not all board members had actually been informed before the statement was issued.

“Nope [I wasn’t consulted]. Some other directors were not consulted either,” said one director who requested anonymity.

In a text message to Skift, Bautista confirmed that he had filed his retirement “last month,” despite having just been re-elected president and COO in a board meeting on May 30.

He also said, “My retirement will be formally accepted on Monday [June 24] during the board meeting. I will formally retire on June 30, but if the turnover of the office is done earlier, I can just take a terminal leave.”

He was mum, however, when asked if he was forced to retire. A longtime trusted lieutenant of the tycoon, Bautista is not one to talk ill about his boss’s family members.

A source said Bautista was expected to return from Paris and assume his duties at the airline until his retirement took effect. “We don’t know if the chairman really did accept his retirement,” said the source.

By most accounts, Bautista could be a casualty in a long-planned consolidation of power and control by the elder Tan’s first family.

Now 83, the elder Tan was named the fourth richest man in the Philippines with a net worth of $4.4 billion, according to the latest Forbes ranking of the country’s wealthiest individuals.

Aside from Vivienne Tan and Bautista, the elder Tan’s family members also sit on the 15-person board, including his first wife and Vivienne Tan’s mother, Carmen Khao, and their children, Lucio “Bong” Jr. who is vice chairman, and Rowena T. Chua, their eldest child.

Another son of Tan, but with his second wife Letty Gonzales, Michael Tan, is also a board director, and had earlier been rumored to be in line to take over his father’s vast empire, which also has interests in banking, food and beverage, tobacco and alcohol, and real estate. This falls under the Lucio Tan Group, a separately listed holding firm, which Michael Tan heads as president and COO.

Family Affair

Largely credited for turning PAL around from a losing company into a formidable force in Philippine aviation, Bautista gave 26 years of his life to the airline, 13 years of which as its president and COO. In late January All Nippon Airways Holdings’ acquired a 9.5 percent stake in PAL for $95 million. Last November Australia-based AirlineRatings.com rated PAL the world’s most improved airline 2019. That same month, PAL received the Four Star Major Regional Airline 2019 award from New-York based Airline Passenger Experience Association, which it said was based on a verified passenger voting system.

It was Bautista who appointed the younger Tan as officer in charge, according to sources. “It was JJB [Bautista’s initials] who appointed her as his [officer in charge] while he was out,” said a person familiar with the matter.

Newly retired Jaime J. Bautista (right) with PAL’s Vivienne Tan and Fred Mison at a lunch honoring Bautista on Thursday. Photo: Fred Mison Facebook account

An analyst, Astro del Castillo, managing director of First Grade Finance, a finance and investment company, said: “It seems that Vivienne already has the capability to really head an organization such as PAL, especially since the position is one of trust and confidence.”

He added that since PAL is a Lucio Tan-owned company, “it is expected that the children takes over, and Vivienne has a long experience managing a corporation.”

“I’m sure she will find professional help to give her a better grasp of what can be done for PAL to improve it better, especially since the airline is aggressively expanding,” said del Castillo.

He added, “The aviation industry is full of challenges, so she really needs to surround herself with competent staff. The investors and the industry just hope that the company would be shielded from any rumored family turmoil.”

PAL is facing difficulty to regain profitability. Like most legacy carriers, its fares are being undercut by low-cost carriers, while aviation fuel cost rises. PAL Holdings, which operates the carrier, expects to be back in the black this year, after a loss of $65.9 million in 2018.

The change of leadership has not made a dent in either PAL’s shares or Lucio Tan Group’s shares.

Changing of the Guard

A warm and affable fellow and well-liked by many, Bautista had kept a watchful eye on the airline’s bottom line. He inspired a high degree of loyalty not just from employees but former colleagues as well.

A former lieutenant of the elder Tan, who still keeps tabs on the ongoing drama of the Taipan’s family, said many of his ex-colleagues and PAL insiders were shocked and dismayed by how the change was carried out. “That was not nice to announce [Vivienne’s takeover] while JJB was in Paris,” the source stressed.

Many key officers seen as loyal to Bautista had either been let go, asked to resign, or sidelined, in the past few months, PAL insiders said. Among the affected officers were Nicky Gozon, Stewart Lim, Kevin Hartigan Go, Babyruth Chuansu, and Jessica Abaya, said sources.

In the news statement, the younger Tan said: “As this is the beginning of JJB’s retirement life with his family, let it also be the beginning of even greater dreams for PAL and all PALers.

“On behalf of my father, I am asking all of you to continue working toward our goals. I am personally committed to working with all of you hand in hand and build on what we have already accomplished.”

The airline said Vivienne Tan was educated in the U.S. and “has more than 25 years of professional experience in technology, education, entrepreneurship, and social advocacy in industries such as education, airline, and property development.”

Aside from PAL, she is also a board member of Tan holding firm LT Group, Philippine National Bank, Eton Properties, Dynamic Holdings, and the University of the East Ramon Magsaysay Memorial Medical Center.

Photo Credit: Philippine Airlines Airbus A320-214. Lasta29 / Flickr