Cathay ready to sit down and talk again, Erap says

The Manila Times
Wednesday, December 9, 1998
Richel B. Langit

Hong Kong-based Cathay Pacific Airways has not given up plans to get into debt-ridden Philippine Airlines (PAL) following a personal intercession by President Estrada.

Cathay officials are “still willing to negotiate,” Estrada told reporters in an ambush interview.

Talks with Cathay Pacific Airlines had ended last week because of irreconcilable differences during their negotiations with PAL.

Finance Secretary Edgardo Espiritu said the results of revived discussions between Cathay and PAL will be known “in two to three day's time.”

Estrada initially denied having talked to Cathay officials. “Hindi pa naman (Not yet)," he said when asked if he had talked to Cathay officials.

Espiritu, however, confirmed that such talks had taken place, although he did not provide details.

"Tumawag ang presidente, may nakausap na siya na negosyador ng Cathay. Masasabi ko nabuhay ang discussions. Siguro sa dalawa o tatlong araw, malalaman na natin kung matutuloy o hindi ang Cathay,” Espiritu said in a radio interview. [The President called and said he talked to some Cathay officials. I can say the talks have been revived. Maybe we will know in two or three days if the deal will push through.]

No bail-out

Presidential spokesman Fernando Barican, meanwhile, maintained the government's position not to bail out PAL.

“The government's policy is unchanged. There will be no government bailout or subsidy to Philippine Airlines,” he said.

Although Cathay was still concerned about the constitutional limitation on foreign ownership, Espiritu said it has shown openness in accepting the conditions of a management-proposed industrial peace pact, whose approval in a referendum last September allowed PAL to resume operations.

"Mayroong referendum na dapat respetuhin at nandito naman yung stages ng phaseout or retirement ng some employees, including officers ng PAL at mukhang 'yan ay hindi na masyadong critical na problema," he said. [There is a referendum that needs to be respected. It provides for the phaseout or retirement of employees, including officers of PAL, and that doesn't appear to be a critical issue anymore.]

The finance chief added that the basic issue now is the constitutional limitation on foreign participation in policy and decision-making. Cathay wanted to have the final say in running PAL.

More leeway

Espiritu also said PAL's stockholders are willing to give Cathay a leeway in managing the airline in return for the Hong Kong-based company's commitment to invest more in PAL.

“Gumagawa  sila ng paraan upang ‘di naman matakot ang ating foreign investors na baka i-invoke natin ang Constitution tungkol sa pagpapatakbo ng PAL," he said. [They are thinking of ways to assure foreign investors that we will not invoke the Constitution in the way PAL will be managed.]

Espiritu also said a potential strategic partner of PAL is Singapore Airlines. He said talks are on a preliminary level.

Singapore Airlines, however, said it has “no interest” in purchasing PAL, which has been seeking a buyer as it staggers under heavy debt.

Singapore Airlines, Asia's most profitable carrier, said in a statement that it had “decided to put an end to speculation" it would buy a substantial stake in the beleaguered PAL.

PAL had hoped for an infusion of capital to keep it afloat and help it resume payments on $2.1 billion in debt.

Following the Hong Kong airline's previously reported withdrawal, attention refocused on Singapore Airlines, which had earlier expressed an interest in Philippine Airlines following its brief closure in September and October.

But the city-state’s flag carrier has “no interest in purchasing Philippine Airlines and, contrary to recent press reports, no team from SIA is visiting Manila this week,” it said in a statement yesterday.@