PAL Loses P2.2B in 1st Quarter

Today
Wednesday, September 2, 1998
By Lawrence Agcaoili
Reporter

TOBACCO and liquor magnate Lucio Tan is willing to forge an “amicable settlement” with Philippine Airlines employees to settle once and for all the labor problems besetting the national flag carrier.

Finance Secretary Edgardo Espiritu met with Tan Monday to discuss the directive of President Estrada creating a task force to come up with “wholistic, creative and innovative” solutions to PAL’s problems.

“The fact is he is open to an amicable settlement. Hopefully this will lead to a mutually beneficial agreement,“ Espiritu said in an interview.

Crippled national flag carrier Philippine Airlines Inc. (PAL) of tobacco and beer magnate Lucio Tan incurred a net loss of P2.2 billion in the first quarter of its fiscal year compared with the P502.9 million net loss it posted in the same quarter last year.

In an unaudited financial statement submitted to the Securities and Exchange Commission (SEC), PAL said revenues fell 14.5 percent to P7.67 billion from April to June this year from last year’s P8.97 billion due to declare in passenger as well as cargo revenue.

PAL Chief Financial Officer Jaime Bautista said in the report that higher foreign exchange loss, financing charges and other none operating expenses resulted in the substantial net loss in first quarter operations.

The report showed that the airline’s financing charges surged 182.5 percent to P1.15 billion in the first quarter compared with P407.72 million in the same period last year.

The decline in revenues was also attributed to the labor strike staged by the Airline Pilots Association of the Philippines in June which led to the cancellation of 69 percent of the airline’s scheduled flights.

The report showed that passenger revenues of PAL went down by 17.87 percent to P6.02 billion from P7.33 billion, but cargo revenues inched up by almost 4 percent to P877.44 million from P843.76 million.

Operating expenses declined by 13.3 percent to P7.82 billion from P9.02 billion due to the decline in expenses for flying operations, passenger service, advertising and publicity as well as lease charges.

PAL lost P8.08 billion in its fiscal year ending March 31 this year, three times than it lost in the previous year. It has an outstanding financial obligation of $2 billon which was used to finance the acquisition of 36 new aircrafts under a $4-billion expansion program.

The reflecting program involved the acquisition of 36 new jets from Boeing Co. and Airbus Industries. Of the entire package, 20 new jets were delivered while the rest has been called off.

PAL had sought for the appointment of a rehabilitation receiver to implement a plan that will help pay owed to several creditors. PAL claims it owns sufficient property to cover all its debts, citing that assets amount to P90.64 billion.

All claims for payment against PAL were considered suspended as the hearing panel formed interim receivership committee in June 23.

The SEC issued an order dated July 1 freezing all the assets of PAL and required prior approval from the hearing panel before all sales, transfer of assignment, lease or mortgage beyond P3 million can be affected.

An interim rehabilitation receiver created by the SEC is supposed to submit a viable rehabilitation plan that will enable PAL to get back on its feet and pay off its creditors by September 21.

The proposed rehabilitation plan will be presented to the airline’s creditors, employees and other claimants during a hearing scheduled on September 30.

As of June, the assets of the airline stood at P92.8 billion while total liabilities reached P26.77 billion, exclusive of a long-term debt amounting to P10.15 billion.

Liabilities went up by P4 billion from the March figures due to an increase in obligations under capital lease and on the account of foreign exchange adjustments.