Tan ejects brother as turbulence hits PAL

August 25, 2009
Manila Standard Today
by Roderick T. dela Cruz

PAL Holdings, the holding company of Philippine Airlines, has elected a brother of taipan Lucio Tan as its chairman to replace another brother, Mariano Tanenglian, who was removed from the board.

In a disclosure to the stock exchange, PAL Holdings said Harry Tan was appointed the holding firm’s new chairman, replacing Tanenglian as a part of a reorganization of its board committees.

The company did not cite the reasons for the change, but it was believed to have been caused by an unresolved feud between Lucio Tan and his younger brother Tanenglian.

Tanenglian was earlier removed from the board of the Philippine National Bank and Eton Properties Philippines, both of which are controlled by Lucio Tan.

The rift between the two brothers reached a boiling point when Tanenglian threatened to testify for the government in its ill-gotten-wealth cases against his older brother.

Lawyers representing Tanenglian yesterday distributed a copy of a letter to the Presidential Commission on Good Government dated Aug. 19, reminding the agency of their client’s offer to testify against his brother in exchange for immunity for himself and his family.

“Up to the present... after the lapse of more than one month, our client’s offer of cooperation and request for such grant of immunity have not yet been acted upon,” the letter from the Azura Quiroz & Campos law office said.

“In the meantime, the window of opportunity is fast approaching (sic).”

The letter ended with the suggestion that further delay by the commission would be interpreted as the result of pressure “by a very influential party” involved in the case.

In its board reorganization, PAL Holdings also appointed Michael Tan, a son of the taipan, a member of the Audit Committee in place of Enrique Cheng.

Lucio Tan Jr., another son of the taipan, and Juanita Tan Lee were appointed alternate members of the same committee.

Lucio Tan remains chairman of the airline itself while Bautista remains president.

The directors of PAL Holdings nominated for fiscal year 2009-2010 include Lucio Tan, Harry Tan, Jaime Bautista, Domingo Chua, Lucio Tan Jr., Michael Tan, Juanita Tan Lee, and Wilson Young. The independent directors were Johnip Cua, Antonino Alindogan Jr. and Enrique Cheng.

PAL booked a comprehensive income of $35.5 million in the April-June period, which represents the first quarter of its fiscal year.

But the airline said the amount was down by $9.6 million over the same period last year because of declining passenger volume.

The airline incurred a net loss of $301 million in the fiscal year ending March 2009, reversing a net profit of $30.6 million a year earlier.

The airline operates 47 aircraft that fly to 29 domestic destinations and 31 international routes. It employs 8,052 workers and does not expect to hire more employees within the next 12 months.