PAL posts 77% drop in net income

Malaya
Wednesday, September 2, 1998
Vic S. Lopez

Philippine Airlines posted a whopping 77 percent drop in income during the first quarter of its current fiscal year.

From April to June this year, income dropped from P2.2 billion to P502.9 million. Revenues dropped by P1.3 billion from P7.33 billion to P6.01 billion due to the labor strike staged by its pilots during the first week of June.

The strike forced PAL to discontinue 69 percent of its flight schedule.

PAL's finances was hobbled by the 360 percent increase in interest charges and currency losses of P2.051 billion.

Total assets of the country's flag-carrier now under receivership with the Securities and Exchange Commission (SEC) stood at P92.8 billion as of end June 1998 as compared to P91.1 billion in March 1998.
Total stockholders equity amounted to P3.8 billion down by 37 percent from March 1998.

PAL, chaired by tobacco magnate Lucio Tan, filed a petition for approval of rehabilitation plan and for appointment of a rehabilitation receiver.

PAL told the SEC in its petition that it foresees the impossibility of paying its obligations and liabilities as they fall due.

"Losses which petitioner (PAL) has been suffering have been aggravated by the economic crisis presently being suffered by the Philippines and a number of other Asian countries, low passenger traffic, and labor disputes, the most recent and debilitating of which is a strike of more than 90 percent of its pilots which has crippled its operations, thereby preventing it from earning revenues while its liabilities continue to fall due," PAL said in its petition.

It added that it anticipates, however, that it will be able to pay its obligations if it is rehabilitated in accordance with the rehabilitation plan to be formulated.

PAL said it owns and possesses sufficient property to cover all its debts. Its total assets amount to P90.643 billion, while its total liabilities amount to P85.109 billion.

The breakdown of PAL's P85.109-billion outstanding debt and other liabilities are as follows: short-term debt, P5301 billion; long-term debt, P15.27 billion; capital leases, P46.418 billion; trade payables, P515.291 million; accrued expenses, P6.167 billion; unearned transportation revenue, P3.167 billion; reserve and other liabilities, P5.452 billion; and other payables, P2.611 billion.@