Thursday, December 24, 1998
MANILA – Philippine Airlines (PAL) ran into more turbulence as foreign creditors rejected a proposed rehabilitation plan, but company officials said they remained hopeful that the ailing flag carrier would remain in the skies.
Credit Agricole Indosuez submitted a letter to the Securities and Exchange Commission (SEC) rejecting PAL’s stand-alone proposal, saying a strategic partner was essential to keep the airline viable.
Credit Agricole controls leases on PAL’s 12 Airbus jets, or more than half of the company’s 22-aircraft fleet which it hopes to fly under its survival plan.
PAL Vice President for Operations Avelino Zapanta said that the SEC would hold deliberations next month on the flag carrier’s rehabilitation plan, and that he remained optimistic about the airline’s future.
“While there is as yet no strategic partner, our plan is still very viable and will put us back on positive territory in three years,” Zapanta said.
PAL is laboring under a debt of $2.1 billion which along with labor unrest and the Asian financial crisis led to the airline’s brief closure in September.
Talks with Cathay Pacific Airways and Northwest Airlines for a possible partnership also collapsed last month over disputes over management control, dimming further PAL’s future.
Zapanta said the company could still sway creditors, as he said the government was doing all it could to keep the airline open.
“The government and GFIs (government financing institutions) are exploring the possibility of investing in the company, and these are very acceptable partners,” Zapanta said.
Under the rehabilitation plan submitted by PAL on Dec. 7, its creditors will be required to reschedule payments of its $2.1-billion debt, and investors will have to infuse $150 million in new money.
Creditors insist on the entry of a new strategic partner and fresh capital to keep PAL flying, but up to now there are no clear takers.
A proposal to tap a portion of Japan’s $30-billion Miyazawa Fund to keep PAL flying even if no foreign creditor comes along has been met with stern opposition from a senior economic official.
“It would send the wrong signal since the government said it would take a strategic interest (in PAL). But provincial businessmen have told me that they would not want to risk a disruption of domestic cargo service,” said Economic Planning Secretary Felipe Medalla.
Zapanta remained upbeat. “Creditors, after all, are not in the business of pulling out aircraft, they want to lease these aircraft. It’s just a matter of convincing them that we can remain viable,” he added.
No comments:
Post a Comment