Business Mirror
FLAG carrier Philippine Airlines (PAL) said on Thursday talks with prospective investors for the planned bailout of the carrier from financial woes had been set aside and that over 500 passengers have already canceled their bookings.
In a briefing, PAL president Jaime Bautista said these were brought about by Monday’s hostage crisis and the still-unresolved labor problems with pilots and ground cabin crew.
“We have not talked to [investors] for quite some time now. They have kind of lost their appetite with what’s going on right now. They told us that we should fix our internal problems first before we resume talks,” said Bautista.
PAL is on the lookout for investors for over a year now who can infuse fresh capital into the beleaguered airline. Bautista said without new investors the airline cannot implement the quasi-judicial reorganization plan that involves selling several non-core assets.
The plan is for the airline to increase the authorized capital stock from P16 billion to P20 billion. Bautista said the reorganization entails the reduction in the par value of the shares of stock from 80 centavos to 20 centavos and increasing the number of shares from 16 billion to 100 billion shares.
“It was already approved in the last stockholders’ meeting but we were not successful in attracting investors.?In order for us to implement our approved quasi-judicial reorganization plan we need investors. We hope to implement it this year,” said Bautista.
It has been months since PAL was?actively involved in discussions with an airline based in Asia, silent investors and investment banks, said Bautista. He did not disclose their identities but said some are passive investors.
The talks were centered on how investors can help PAL’s financial situation which continues to deteriorate. The company sustained over $350 million (or more than P15 billion) in losses during the last two fiscal years. Its equity has also dropped to a little over $1.1 million as of February 2010.
Moreover, the airline is now faced with labor issues. Some 27 pilots have resigned to date and some 6,000 flight attendants have threatened?to stage?a strike.
Bautista said the shortage of pilots is now being addressed. “We are training 40 pilots. Four will graduate next month and another four in October. We will upgrade them to captains and first officers,” said the PAL president.
In the wake of Monday’s tragic hostage-taking incident, PAL said about were 558 tourists from Hong Kong and mainland China have canceled their bookings with the airline. This translates to around $167,400 in revenue losses for PAL.
“PAL is beginning to feel the initial impact of a Hong Kong government advisory warning its residents to refrain from all travel to the Philippines. As of Wednesday, our Hong Kong station reported at least 558 Manila-bound bookings were canceled. The bookings consisted of tourists from Hong Kong, Beijing, Xiamen and other points in China,” said Bautista.?
In the Philippines, Bautista said two Hong Kong and Macau-bound Filipino tourists opted to change their destinations in view of the current situation.
Despite the negative travel advisory, PAL continues to mount five daily flights to and from the former Crown Colony. “We’re closely monitoring the situation and will decide soon whether we will maintain or reduce flights. We share the grief and understand the Hong Kong people’s wrath. We are optimistic that fears of traveling to the Philippines will be temporary,” Bautista said.
He said PAL has yet to determine the financial impact of the booking cancellations at this early stage. However, he admitted that the negative travel advisories to the Philippines are not helping the flag carrier which is currently struggling financially and grappling with restive workers.
“We understand that Philippine officials in Hong Kong met with the latter’s legislative and travel councils and assured them that the Philippines is still a safe and viable tourist destination. We are looking forward that it will soon lead to the lifting of the travel restrictions,” he added. ?
Hong Kong contributes roughly 6 percent of PAL’s total revenue. China’s share is 3.3 percent and 0.04 percent for Macau. The US remains PAL’s single-biggest revenue maker at 25 percent. Domestic routes contribute 30 percent of the airline’s total revenue.
Bautista said the load factor for Hong Kong and China still remains in the high 70 percent.
Cebu Pacific said separately that less than 50 passengers have canceled their Manila-Hong Kong bookings. “We hope it won’t get worse. We don’t see any need to reduce or cancel our flights,” said Candice Iyog, vice president for marketing and distribution.
To entice the public, PAL said it would continue to offer promotional fares for its Hong Kong and China flights, market more seats and waive the rebooking penalty on PAL tickets issued in Hong Kong for those intending to fly back ahead of schedule.
Visiting Hong Kong nationals who are heeding the travel advisory will not be penalized with any pertinent fees or charges when they present their tickets for rebooking or taking an earlier flight back to Hong Kong. The tickets must have been issued in Hong Kong.
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