PAL to Cut Financial Liabilities

Today

Thursday, December 10, 1998

FINANCIALLY hammered Philippine Airlines Inc. expects to significantly cut its mounting financial obligations by an annual average of 6.2 percent over the next seven years.

The projection, which is part of the rehabilitation plan submitted to the Securities and Exchange Commission (SEC), is aimed at bringing the ailing 57-year-old airline back on its feet.

In a financial plan submitted by the airline's interim rehabilitation receiver to the SEC hearing panel, the company said it intends to bring down its total liabilities from $1.73 billion for fiscal year 1999-2000 to only $1.14 billion by the year 2005 and 2006.

Initially, the company intends to reduce its debt to $1.73 billion from $2.2 billion from a combination of fresh equity infusion by current shareholders led by PAL owner Lucio Tan and the proceeds from company asset sales.

PAL also expects its losses to be reduced to only $4.3 million in fiscal year 1999-2000 while revenues are projected to hit $633.50 million.

PAL's losses tripled to $152.5 million in the first half of fiscal year 1998-1999 from only $52.75 million in the same period last year. Revenues, on the other hand, are expected to reach $633.5 million.

Mounting financing charges and other interest expenses are seen to push up the company's losses above the P8.8 billion it recorded in fiscal year 1997-1998.

The airline is banking on the SEC's approval of the rehabilitation plan which it submitted to the SEC on Monday. If approved, the company will be able to restructure its financial obligations and accept additional equity from its shareholders. L. Agcaoili