PAL to Submit Rehab Plan—Mendoza

The Journal

Friday, December 4, 1998

By Lawrence Agcaoili

Reporter

FINANCIALLY battered Philippine Airlines Inc. (PAL) will submit a rehabilitation plan to bring it back to its feet with or without a foreign partner.

The airline, owned by beer and tobacco Lucio Tan, made the decision after its talks with Cathay Pacific Airways of Hong Kong and Northwest Airways of the United States collapsed.

In an interview with reporters, its lawyer Estelito Mendoza said company's interim rehabilitation receiver will not seek from the Securities and Exchange Commission (SEC) another extension to the deadline for the submis­sion of its rehabilitation plan.

Mendoza said PAL will submit a "stand-alone” rehabilitation plan in place of the rehabilitation plan that was supposed to incorporate the recovery program of Cathay Pacific.

FINANCE Secretary Edgardo Espiritu is confident that a “white knight" will come to the rescue of troubled Philippine Airlines, saying that there are other investors that are interested to help rehabilitate Asia's old­est carrier.

Espiritu expressed his sentiment as the possibility that Lucio Tan, PAL chairman and majority owner, would decide to infuse the $150 million needed to rehabilitate the ailing airline.

"'There are other interested investors coming in, (but) they (not) be a strategic partner (as) Cathay and Northwest would have been," he said.

Manolo Aquino, PAL senior vice pres­ident for operations, confirmed Espiritu's statement, saying that PAL is talking with local firms which he declined to name.

"We will weigh whatever (PAL) will file...We cannot make any comment so it will not prejudice any negotiations," SEC officer in charge Fe Eloisa Gloria told reporters when made to comment on PAL's new action.

PALs rehabilitation receiver had sought an extension for submission of its proposed recov­ery plan to accommodate the expected equity Infusion of Cathay Pacific.

Mendoza said PAL's management will submit the rehabilitation plan even without a new partner to infuse fresh equity and expertise.

"It will be more difficult to rehabilitate PAL, but it won't be impossible...Also, the airline would have to downsize drastically, it will have tote a smaller PAL," Mendoza said.

Despite Cathay's decision to pull out from the talks, Mendoza said the airline’s rehabilitation receiver expects PAL to submit a rehabilitation plan as scheduled Monday.