Goodbye to All That

Malaya

Thursday, September 24, 1998

By J.A. Dela Cruz

UP to the last minute, we were hoping that the planned closure of the Philippine Airlines would be aborted. Like an old habit, we were clinging to that one last glue invariably called national pride and sense of history which we thought would prod the entire country, Mr. Tan and the unions included, to come together, rise above the concerns of the moment and give PAL another chance. Unfortunately, like many of the things we hold dear, such a wish had to give way to the cold and cruel dictates of doing business in this day and age. PAL, as we know it, no longer exists. With its liquidation also goes the culture of dependence on government largesse or intervention which until this catastrophic event happened dominated and, in a very real sense, continues to exert considerable influence in the manner by which business is conducted in this country. Thus, in the case of PAL, no less than President Estrada and senior government officials tried to broker, in a sense, the airline's continued survival.

One can argue that because of its strategic importance as the national flag carrier, PAL's fate, much more its liquidation, deserved government's undivided attention. There should be no quarrel with that. But when the Aquino administration decided not too long ago to deregulate the airline industry and privatize PAL it already made a choice to leave the whole business of providing the country's air link and the corresponding responsibility to safeguard the riding public and ensure efficiency and effectivity to the dictates of the market. With competition providing the "leveraging hand" in the provision of safe, reliable and affordable air travel within and outside the countr, government's actual participation in the industry was deemed limited to providing the needful environment under which competition can be nurtured and sustained. Under this dictum, government, in fact, was obligated to accelerate the sale of its remaining stakes in PAL. In the same token, it was obliged to leave the business of running the airline including the decision to downsize, hire and fire and even liquidate all or part of the company to management.

If, as is now being argued, PAL is really such a strategic undertaking to leave to the private sector then government should not have even ventured to privatize it in the first place. It should have just poured in good money after bad and subsidized the airline with the hard earned monies and sacrifices of the entire Filipino public. It should have, in other words, declared PAL a national treasure and thus freed from the cruel dictates of the market. After all, it had gone through this route before so what's another try no matter how disastrous the results maybe. But, as is now made clear with this liquidation, that route is not only unresponsive and irresponsible. It may now be unavailable for good not only for PAL but for all other enterprises which heretofore had fed on government and, ultimately, the public to maintain their bloated workforces, unresponsive managements and uncompetitive positions. From here on, it will have to be produce, compete or die.

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We had expected all along that one or all of the PAL unions will bring out mismanagement as an issue against Mr. Tan and company. But we did not expect the same to be brought up this late and amateurishly at that by the otherwise thinking PAL pilots’ union. In the first place, the practices they accuse Mr. Tan of doing or having done, if true, should have been brought out in the open immediately after his takeover after all most of those allegedly questionable dealings happened then when the airline had to restructure its finances to accommodate the disastrous consequences of previous mismanagement and, in an effort to fast track its recovery, underwent a well regarded refleeting program. For the pilots to claim now that Mr. Tan and company has milked PAL high and dry in the fantastic amount of P25 billion is too much of a stretch, it makes one wonder where these people have been all this while. To begin with, PAL did not have then nor does it now have P25 billion to give away to anybody, Mr. Tan included. When he took over, the airline was already in the red and had to infuse P15 billion of his own money to keep the airline afloat. That capital is gone for good with only a number of equipment, leases and other properties left to answer for the airline's liabilities. In fact at the rate PAL is losing on a daily basis, analysts believe that the company’s net worth is already negative or nearing the same. Moreover, the pilots' arithmetic does not add up since their computations of possible rebates, self-dealings and related misdemeanors are all too questionable to be believed. In any event, as we have noted and continue to note to date if in the pilots' view they can run the airline better than Mr. Tan, then by all means they should now be allowed to take over the airline and spare Mr. Tan all the heartaches of producing the much needed cast or collateral or credit lines which he has had to extend up to yesterday to keep the airline flying. Not even the government financial institutions which had billions of peso sunked into PAL dared to offer to take over the company. Not then, Not yesterday.