PAL Seeks Concessions

Malaya News

Thursday, December 10, 1998

Cathay turns back on further talks

By PEARL O. BANTILLO

The Philippine Airlines wants concessions from the government to be able to fully rehabilitate itself.

Under its rehabilitation program submitted to the Securities and Exchange Commission last Monday, PAL wants that it be exempted from landing charges and that the government require government and overseas workers to use only PAL.

In another development, Cathay Pacific Airways Ltd. Reiterated that talks to acquire a stake in Philippine Airlines Inc.(PAL) were over.

“As far as we are concerned this is behind us,” Chief Operating Officer Philip Chen told reporters in Hong Kong.

The government has been trying to resurrect talks between Cathay and PAL after Cathay pulled out of talks last week. “We have had no formal approach,” Chen said yesterday.

Asked whether Cathay would be interested in buying certain parts of PAL, Chen said: “We actually have not come down to those details.”

He declined to say how much Cathay had spent on due diligence work on PAL. “Cathay has put in a lot of resources – financial and manpower,” he said.

Asked whether Cathay was looking at other acquisitions, Chen said the carrier’s policy had “always been very prudent.”

“We do not go around hunting or shopping for shares,” he said.

The government was also asked to help in such a way as to “remove the temporary operation permits granted to other airlines under the previous administration in respect of the Middle East, Hong Kong, Taipei and Singapore routes.”

PAL Senior Vice President for Sales and Operation Avelino Zapanta said: “We are not asking for monopoly but trading of natural resources like skies through a mutually beneficial arrangement.”

The rehabilitation plan also showed PAL wants a commitment of support from the Civil Aeronautic Board by making the flag carrier as the “designated carrier on all routes subject of air service agreements to which the Philippines is and will be a party.”

Zapanta noted that the permits given to other airlines to fly into the country must be removed or have them formalized in recognizing the “reciprocal rights” of aircraft in common skies.

“TOP, by their nature, are temporary. They ought to be formalized through a bilateral treaty on the basis of reciprocal rights,” he said.

The PAL executive noted that the privileges of some airlines to come  and go as they please into the country were not necessarily afforded to PAL in other airlines’ skies.

“Traffics rights historically given away by the government agencies have cost PAL a substantial reduction in load factors and yields revenues from commercial agreements. Operation the missionary routes cost PAL $633 million in bottom-line losses,” the documents stated citing the factors that aggravated that financial malaise of PAL.