PAL debt tally now at P86 B

Business World
September 3, 1998
Maricris C. Carlos

Beleaguered firm Philippine Airlines, Inc. (PAL) is facing additional claims of more than P1 billion from creditors on top of the P85 billion in liabilities the flag carrier earlier declared.

According to data from the Securities and Exchange Commission (SEC), total peso-denominated claims recently filed against the ailing firm have reached P986.84 million, while dollar-denominated claims now total $4.1 million or about P175.82 million -- using an exchange rate P43 per $1. Its yen-denominated loans, on the other hand, have reached ¥8.6 million ($62,000).

In the last two months, the SEC has been deluged by formal claims filed by a number of PAL creditors, saying their respective receivables have not been included in the P85-billion tally the airline firm declared to the SEC over two months ago.

New claimants include: Mobil Philippines, Inc., for liabilities amounting to P351.096 million; Petron Corp., P201.77 million; Caltex Inc., P27.16 million; Philippine Aviation Security Services Corp., P6 million; Pathfinder Phils. Holdings, Inc., P4.6 million; and Acesite (Philippines) Hotel Corp., P4.24 million.

The other day, PAL reported a P2.2- billion net loss for April-June, the first quarter of its fiscal year 1998.
The amount is three times more than the P502.9-million loss it incurred for the same period in 1997, according to the unaudited financial statements it disclosed to the SEC.

PAL attributed the lackluster performance to the P1.3-billion drop in its revenues -- equivalent to a 15% slide to P7.67 billion from P8.97 billion in 1997. The sharp drop in revenues was due mainly to the labor strike staged by PAL's pilot union in the first week of June 1998, which paralyzed 69% of its flight operations.

Higher foreign exchange losses, financing charges, and other non-operating expenses also accounted for the firm's substantial net loss during the period, said PAL.

During the period, PAL's foreign exchange losses totaled P80.58 million, a reversal from P11.34 million in gains reported in 1997. Its financing charges likewise registered an alarming increase, ballooning to P1.147 billion, almost twice the P407.71 million it shelled out in 1997.

PAL also disclosed that its total liabilities jumped "by P4 billion” between June and March this year. This was due to the increase in obligations under capital lease, also on account of foreign exchange adjustments, and increase in accrued expenses, PAL said. Its assets, meanwhile, stood at P92.8 billion as of June, as against P91.1 billion in March this year.

PAL filed in June this year its petition seeking the creation of a rehabilitation receiver to help it get back on its feet.

It blamed its prolonged labor problems and its $4-billion refleeting program among the major reasons for its financial difficulties. According to documents filed with the SEC, PAL's biggest creditor is Chase Manhattan Bank and its Manila-based affiliate Chase Manhattan International Finance Limited.

Their total exposure amounts to some $244 million. Of the figure, some $182.432 million is unsecured.
Among local creditors, the Philippine National Bank (PNB), which owns a minority stake in PAL, is its biggest lender with its exposure reaching more than $75 million.@