PAL Losses Mount to P2.2B in Three Months

The Philippine Star
Wednesday, September 2, 1998
NEWS

Philippine Airlines (PAL) registered losses amounting to some P2.2 billion from April to June this year alone, and government experts believe it is high time to review aviation policies to help the troubled flag carrier recover from its financial slump.

A financial statement submitted to the Securities and Exchange Commission (SEC) yesterday revealed that PAL’s losses ballooned from a mere P502.9 million in the same period last year. The airline blamed higher losses almost entirely on the pilot’s strike which crippled the airline for three weeks last June.

“Revenues declined mainly due to the labor strike in the first week of June wherein 59 percent of scheduled fights were unable to operate,” PAL said in the statement.

However, although PAL maintained the pilot’s strike beginning last June 5 was the main reason for its near-collapse, SEC records showed that the airline has been losing heavily over the last 12 years.

All in all, the airline has lots P21.12 billion over the years and last year alone, it registered some P8 billion in losses, its worst in 57 years of existence.

PAL’s troubles were doubled by the financial crisis that continued to plague the Asian region, causing the peso’s freefall. PAL’s outstanding loans, most of which were in dollars, went up by P4 billion to a whopping total of P89.2 billion, the statement said.

On the other hand PAL’s assets stood at P92.8 billion as of the end of June, up by P1.7 billion from what it had in March. The increase, according to the company, was due to the acquisition of additional flight equipment.

As this developed, the government panel in charge of studying rehabilitation plans for PAL recommended yesterday that a review be made of the country’s deregulation policy covering the airline industry as well as its air agreement with other countries.

Finance Secretary Edgardo Espiritu, who heads the panel, said they would also look into unprofitable domestic routes that PAL, as the nation’s flag carrier, has been required to service.

PAL should no longer be required to fly these missionary routes,” he said. “ Since the airline industry has been deregulated, there are other local airlines which can service these routes.”

He added that PAL Chairman Lucio Tan was “open to an amicable settlement” with ground crew personnel who went on strike last July. He said he was hopeful this would lead to a “mutually beneficial agreement.”

The government panel, which includes representatives from the departments of finance, tourism, labor, transportation and communications and the SEC, hopes it can submit a report on PAL’s rehabilitation strategy to President Estrada by Friday.

PAL has been granted protection from creditors but is required to submit a rehabilitation plan to the SEC this month.

To date, PAL’s number one creditor is still Chase Manhattan Bank, from which the airline acquired some $229.89 million in long term loans. The Philippine National Bank is its second biggest lender with $66 million in short-term and $9.1 million in long-term loans.