Cathay Remains Hopeful

The Journal

Wednesday, December 9, 1998

MALACAÑANG maintained yesterday that Hong Kong-based Cathay Pacific Airways is still in the thick of negotiations for a stake in Philippine Airlines.

Finance Secretary Edgardo Espiritu said the remaining major concern is the constitutional limitation of Cathay's participation in the policy and decision-making in PAL.

In a radio interview, Espiritu also said the government will revive its bridge financing program for PAL if it can get foreign airlines and companies to invest it.

"Masasabi ko ay nabuhay na naman ang discussions. Siguro sa dalawa o tatIong araw e malalaman na natin kung tuloy o hindi ang Cathay (The discussions are still on. We will know in two to three days' time if the Cathay deal will push through)," he said.

Last Monday, management submitted to a government receivership committee its program to rehabilitate the airline.

The government, Espiritu said, expects the committee to decide within this week whether to approve this PAL rehabilitation plan.

Espiritu belied reports that Cathay snubbed President Estrada last Sunday, saying the President has maintained contact with Cathay representatives through the telephone.

He said that while Cathay remains concerned about the constitutional limitation, it has shown willingness to accept the conditions of a management-proposed "industrial peace" pact, whose approval in a referendum last September allowed PAL to fly again.

The conditions, he said, include retaining most of PAL's employees, with a package of benefits for employees and officers who are willing to retire now.

"Ang naging basic issue ay tungkol sa constitutional limitation, participation ng foreigners sa policy-and decision-making. Nagkaroon ng kaunting issue diyan sapagkat ang gustong rnangyari ng strategic partner they will have a final say over the board sa pagpapatakbo ng PAL (The basic issue now is the constitutional limitation on foreign participation in policy and decision-making. They want to have a final say over the board in running PAL)," he said.

He noted that this may violate the Constitution, which limits foreign participation in any company in the Philippines to 40 percent.

PAL's stockholders, he said, are willing to give Cathay leeway in the day-to-day management of the airline, in return for the Hong Kong-based firm's pledge to bring in more investments into PAL from other foreign companies.

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

As for the retrenchment of workers, Espiritu said this is no longer a major issue.

"Mayroong referendum na dapat respetuhin at nandito naman yung stages ng phase-out or retirement ng some employees including officers ng PAL at mukhang yan ay hindi na masyadong critical na problema (There is a referendum to be respected. It provides for the phase-out or retirement of employees, including officers of PAL, and that seems not a critical issue anymore)," he said.