PAL and Cathay

The Philippine Star
Wednesday, December 9, 1998
Boo Chanco
Demand and Supply

Maybe the marriage of convenience between PAL and Cathay Pacific just wasn't meant to be. It would have been terribly convenient for Lucio Tan to just turn over the problems to Cathay and peg his losses at current levels. But the Cathay negotiators should have left enough room for PAL management to save face. The tough negotiating stances of the Cathay people make them look like conquerors. It was too much for the taipan and his boys.

The top management of Cathay apologized for the behavior of the negotiating panel later on, but it was too late. I understand the PAL team gave the Cathay panel a dose of their own medicine by making them cool their heels in that crucial Saturday when the talks broke down. They simply did not show up at a scheduled lunch meeting. There is so much bad blood now it will be difficult, but not impossible, from them to start a new slate and talk again.

For a self-made billionaire like Tan, saving face is important, maybe more important than the billions he has already lost and will still lose in PAL. It will be tough trying to make it on his own but that’s what they will try to do in PAL assuming the creditors and SEC approve their plan. Poor Mr. Tan will have to put in more money in PAL if they go on a stand-alone basis. Parang nagbabayad na rin si LucioTan ng taxes in the cases DOJ has filed against him at the Marikina RTC.

Hopefully, the National Treasury is not dragged into the mess. I hope President Estrada will keep firm in the policy of keeping government out of PAL. Even the worst case scenario of PAL closing down again is not as bad as the prospect of bringing back the taxpayers to the bottomless pit of PAL finances. It is easier and cheaper for everyone to start a new flag carrier from scratch than to use public funds to save the current PAL.

Or let the competitors loose in PAL's national and international markets. I gathered enough guts to ride Cebu Pacific for the first time the other week and I found the service was good and efficient. And the fact that John Gokongwei was on the same flight I was on, means he is confident about the airline's safety standards.@