Gov't Takeover of PAL Urged

Malaya

Saturday, September 19, 1998

By Joan Revoltar and Prudencio Gadil

Sen.Blas Ople yesterday urged the government to temporarily take over the operations of Philippine Airlines as a matter of national interest. The airline has announced it will close down next week after failing to get union cooperation in a last-ditch effort to stave off bankruptcy.

At the House, congressmen also urged the government to reconsider its “no bail out" stance as they warned that closing the country's flag carrier would be disastrous to the economy.

Rep. Manuel "Mar" Roxas (LP Capiz) and Rep. Herminio Teves (Lamp, Negros Oriental) said closure of PAL could wreak further havoc on local commerce and on tourism.

Tourism Secretary Gemma Cruz-Araneta called on industry members to brace themselves for the "projected calamitous effects" of PAL's closure. "The closure of PAL will have a serious effect on the tourism industry. Closing the Philippine flagship will be nothing short of disastrous for this industry," she said.

Araneta also said local regulating bodies could consider the entry of other airlines, even international ones, into commercial, domestic, and missionary routes to ensure the viability of tourist destinations formerly serviced by PAL.

Ople said government can temporarily handle PAL’s operations until the firm has recovered from its financial and labor troubles and the Asian financial crisis has abated.

Ople said that while government maybe financially incapable of sustaining PAL at the moment, the takeover will send a "positive signal" for prospective investors.

"I am sure there are export and import banks in Europe that are willing to help PAL. The government is a credit-worthy institution," he said.

But Senate President Marcelo Fernan cautioned President Estrada against infusing government funds in the firm and pointed to the projected P70-billion budget deficit. "The government cannot do so at this time," he said.

Sen. Juan Flavier called on the PAL management and the PAL Employees’ Association to meet halfway to stave off the airline's demise.

Rep. Herminio Teves proposed that instead of a direct bailout, government could lease out the operations to another airline.

Teves said that aside from the chaos that the closure of PAL will cause to local business, it would also impact negatively on the country's bid to turn its tourism industry into a dollar-earning venture amidst the currency crisis.

The Airport Services Division of Philippine Airlines said ground handling and catering services will continue.

Felipe Valencia, Chief of PAL's airport services division which is in charge of ground handling and catering services for 19 airline companies, said 1,600 employees, mostly on contractual basis, will be absorbed by other airline companies since they are receiving their salaries from fees collected or paid by their 19 airline-customers.

Groundhandling services include the loading and unloading of passenger's luggage, towing services, and other ground equipment operations.

Cathay Pacific and Northwest Airlines expressed willingness to mount additional flights if PAL closes down.

Northwest Airlines flies twice daily from Manila to the United States via Osaka, and Narita, Japan. (With Jim Bilasano)