3 Other Foreign Airlines Eye PAL; Creditors Wary

The Journal

Friday, December 4, 1998

By Ellie R. Mallorca

BELEAGUERED Philippine Airlines has started partnership negotiation with three other foreign air­lines after buy-in talks with Cathay Airways Ltd and Northwest Airlines collapsed.

This was disclosed by Manolo Aquino, PAL Executive Vice President for Administration, in a hastily called press conference yesterday. He, however, did not identify the three prospective new partners for PAL.

Aquino said PAL, “is prepared and ready to do it alone” in the event that negotiations fail again.

Aquino, however, stressed a foreign partner was still a priority in the rehabilitation program for PAL. Majority owner Lucio Tan is only willing to give up to 40 percent of the airline, Aquino said.

He assured that PAL would not file for a liquidation, but instead a re­habilitation program this Monday — the deadline set by the Securities and Exchange Commission.

"We have a ‘stand alone’ plan that we will submit to the Securities and Exchange Commission on Dec. 7. It does not provide for a foreign airline partner but if there is one in the future, that will be an enhancement,” said Aquino.

Essential to the success of the plan is the continued patronage of the riding public in PAL’s services, which re­sumed on Oct. 7 to domestic destinations after a 13-day forced shutdown. PAL restored flights to the US West Coast on Oct.. 29 and regional services to Hong Kong and Japan on Nov. 11.

"PAL is here to stay," he stressed.

"There are a lot of local investors who want to put money into the air­line," Aquino said.

He said that PAL had already for­mulated its own recovery plan even before entering talks with Cathay Pa­cific in early October for a possible partnership. After weeks of due diligence study, Cathay's proposed rehab plan "closely resembled" PAL's own, he added.

The plan includes the retention of 22 aircraft in the PAL fleet and the restructuring of outstanding obligations. Aquino said the airline's creditors as well as interested investors were keenly awaiting the submission of the rehab plan on Monday.