Recommendation for PAL Rehab Ready by Jan. 7

Malaya

Monday, December 28, 1998

Vic S. Lopez

The three-member task force created by the Securities and Exchange Commission (SEC) for the rehabilitation of Philippine Airlines (PAL) will submit its recommendation by Jan. 7.

Jaime Bautista, senior vice president and chief finance officer of PAL said the recommendation of the task force will be the basis of the three-member panel hearing the suspension of payments petition of PAL.

The panel is headed by acting chairman Fe Eloisa-Gloria, and lawyers Ysobel Murillo and Josefina Yasay-Paz.

Bautista, who was interviewed over the weekend after a meeting with the task force, said PAL’s creditors have asked several questions on PAL’s rehabilitation plan.

"We expect that there will be several objections on PACs rehabilitation plan, initially," Bautista said.

But he said PAL could answer the questions raised by its more than 9,000 creditors.

The questions and clarification for the rehabilitation of the ailing airlines comes mostly from its creditor banks led by the European Export Credit Agencies (ECAs) through French bank, Credit Agricole Indosuez.

The SEC has earlier said it will not allow any termination of a lease agreement with any of the airplanes currently being used by PAL.

The SEC hearing panel has earlier issued an order setting aside and with no effect the notice of termination and lease over Airbus A-330-300 by Pacer Aviation Limited and Credit Agricole Indosuez SA.

The SEC also directed Pacer and Credit Agricole "to cease and desist from requiring PAL to deliver the said subject leased property, or any other leased properties by PAL, in Hong Kong at any given period without prior order from the commission."

The task force will submit to the hearing panel their recommendation within 30 days from the date of the order of the commission, which is Dec. 7, the same day when PAL submitted its rehabilitation plan.

PAL filed a petition to rehabilitate the airline with the SEC last June 19. The financial crisis and the reduced demand for travel placed severe pressure on PAL's cash flows.

Operations have been scaled down to key profitable international and domestic routes while personnel have been reduced from 12,986 in May 1998 to 8,589 as of Nov. 7, 1998.