PAL Seeks Gov't Support...As Cathay Pacific Denies Resumption of Talks

Business World

Thursday, December 10, 1998

By MA. SALVE I. DUPLITO

Reporter

If it wants the flag carrier to recover its health, the government should take up the cudgels for Philippine Airlines, Inc. (PAL).

In fact, PAL's recovery partly depends on the government extending several forms of support as contained in the rehabilitation plan submitted to the Securities and Exchange Commission.

Nevertheless, PAL is confident it will be able to keep itself afloat, judging from its present healthy load factor, and at the same time, hold its creditors at bay.

President Estrada, meanwhile, remained optimistic and still insisted on brokering an agreement between Hong Kong's Cathay Pacific Airways Ltd. and PAL within the week. He, however, refused to set a deadline.

"You know, in negotiations, you cannot set the time (for an agreement to be reached). Maybe they will not agree, maybe they will,” he told reporters at Villamor Air Bose before leaving for Maramag, Bukidnon, where he was scheduled to inaugurate a sugar mill.

The other day, Finance Secretary Edgardo Espiritu said PAL and Cathay resumed negotiations and a result was to be expected within the week.

However, Cathay chief operating officer Philip Chen told reporters in Hong Kong yesterday that talks to acquire a stake in PAL were over. "As far as we are concerned this is behind us”

Still, Mr. Estrada remained hopeful. "We're trying our best to (reach) an agreement,” he said.

KEY AREAS

Among the "key areas” where PAL is asking for government assistance is a commitment from the Civil Aeronautics Board (CAB) to limit the entry of foreign carriers by controlling the grant of new frequencies or capacities to foreign carriers.

“New frequencies or capacities, or increases thereof, shall be granted pursuant to law, to foreign carriers only with the approval of the President of the Republic of the Philippines,” the rehabilitation plan said.

But by asking for this requirement, PAL is effectively seeking a disincentive to other airlines to service the Philippines, a measure that is contrary to the liberalization policies espoused by the government.

In fact, PAL is calling for the cancellation of all temporary operating permits to service the Middle East, Hong Kong, Taipei and Singapore granted to other airlines by the previous administration.