'Sayang'

Malaya
Saturday, September 19, 1998
EDITORIAL

PRESIDENT Estrada was meeting the management of Philippine Airlines late yesterday afternoon in an attempt to keep PAL flying. The exercise is futile. Lucio Tan, the controlling interest, and his partners, mostly government financial institutions, have said they will no longer pour additional money into that bottomless financial black hole that is PAL.

They have lost close to P20 billion. They are not about to let themselves be bled further by at least P8 billion a year (the losses of PAL in its last fiscal year), with no end in sight to the hemorrhage. In fact, PAL's fate is technically already out of the hands of the stockholders.

The other day's decision to close PAL on Sept. 23, it should be stressed, was recommended by the interim receiver committee appointed by the Securities and Exchange Commission. The interim receiver is dominated by management officials, but it is responsible to the SEC. It was scheduled to present a rehabilitation program on Monday. PAL's creditors would then pass over the proposal for a decision on whether to rehabilitate or liquidate the company.

The stockholders have decided to throw in the towel. The SEC has now no alternative but to toss the case to the regular courts for the orderly liquidation of the company to meet claims against its assets.

There was nothing inevitable about PAL's liquidation. The interim receiver was prepared to recommend rehabilitation at the start of the week. When the PAL Employees'  Association agreed Friday last week to a freeze on its collective bargaining agreement, the creditors were prepared to give the airlines a breathing spell on its $2.1 billion loans. New investors would have come in. PAL, would still be flying although with a smaller fleet serving fewer destinations.

PALEA members would get 20 percent of PAL's equity, to be taken from the holdings of Tan. The employes would get three seats in the 15-man board. With the employes having a personal stake in the air-line, PAL would enjoy industrial peace as it sought to recover its competitiveness.

It was not to be. The hardliners in the PALEA had their way. They were determined to bring PAL to its knees. They succeeded in killing it instead.

Sayang.