Friday, 27 August 2010 00:00
BY DARWIN G AMOJELAR SENIOR REPORTER
THE MANILA TIMES
PHILIPPINE Airlines (PAL) is laying the ground for the entry of a strategic partner after its stockholders reduced the price of its shares while raising the company’s authorized capital.
In a briefing, Jaime Bautista, PAL president, said on Thursday that the airline’s stockholders approved a plan to cut the par value of its shares from P0.80 to P0.20 apiece.
He said owners also increased PAL’s authorized capital stock from P16 billion to P20 billion, divided into 100 billion shares.
“There was an approval to implement the quasi-reorganization last year, but we were not able to implement it ... because we are not successful in attracting new investors. To implement it we need investors,” Bautista said.
“We hope we will implement [the reorganization] this year. It will help support our program, improve liquidity and improve [the] working capital position of the company,” he said.
Bautista had said that PAL is talking to several fund managers and Asian airlines for possible investments in the flag-carrier.
He said PAL’s negotiations with possible investors were put on hold because “the appetite has decreased due to the labor problems that we are experiencing right now.”
The 69-year-old airline is beset by labor problems and a travel ban by Hong Kong at a time when the international airline industry expects growth to resume.
In 1998, Hong Kong-based Cathay Pacific Airways Ltd. had contemplated on investing in PAL but
the plan failed to materialize because of “major differences.”
The Philippine carrier sought rehabilitation in 1998 after racking up $2.12 billion in debts.
PAL brought down its liabilities to about $1 billion since entering corporate receivership, and emerged from rehabilitation after recording a profit in 2007.
But the airline’s finances collapsed in the succeeding three years, with $350 million, or at least P15 billion, in losses during its last two fiscal years.
Its equity also dropped precipitously to a little over $1.1 million as of February this year.
Because of this, the company decided to let go of at least 3,000 employees with the spin-off of its three non-core businesses.
The affected workers belong to the in-flight catering services, airport services (including ground handling, cargo terminal/cargo handling, and ramp handling) and call center reservations.
With this, the PAL Employees Association and the Flight Attendants and Stewards Association of the Philippines (FASAP) have threatened to go on strike.
Bautista said the airline’s labor problems and the recent tragic hostage incident in Manila affected PAL’s forward booking.
He said 558 passengers cancelled flights to the Philippines for estimated revenue loss of $167,000.
PAL turned a profit of $31.6 million (P1.45 billion) in the April to June period, or lower than last year.
Revenues went up by 30 percent to $426.7 million from last year’s $327.7 million.
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