Erap Vow to Save PAL Firm

People’s Journal

Tuesday, December 29, 1998

President Estrada is confident that negotiations to save Philippine Airlines would reach a happy conclusion by January next year.

The President yesterday said he remains hopeful that there would be a settlement with Hong Kong-based Cathay Pacific Airways, ”hopefully by next month.”

“They’re still negotiating, and I hope they will settle it, hopefully by next month,” Mr. Estrada said when asked by reporters at the Ninoy Aquino International Airport about the progress of the negotiations.

He reiterated his administration’s commitment to save PAL “at all costs,” saying too much is at stake if the airline shuts down.

He explained that among the airlines now operating in the Philippines, only PAL has the capability to fly to all domestic routes and carry passengers and cargoes to these destinations.

“We are trying our best to save PAL because if PAL closes, all businesses will be affected,” the President pointed out.

Mr. Estrada was at NAIA yesterday morning to lead government officials in welcoming overseas Filipino workers who came home for the holidays.

Last week, Executive Secretary Ronaldo Zamora said talks are still ongoing between PAL and possible strategic partners, including Cathay.

Zamora said in a radio interview that the parties are keeping the talks under wraps because they do not want any side issues to surface at this time.

However, he reiterated the Estrada administration’s position that the government would not take over PAL and assume its huge debts.

Earlier, Cathay announced it was pulling out of talks following speculations that a takeover of PAL management may violate the 1987 constitution.

Under the Constitution, foreign companies can own only up to 40 percent of any business firm in the Philippines.

Negotiations for a possible strategic partnership is one of two options to save PAL, the other being an infusion into the airline of part of the $30-billion Miyazawa Fund initiative for crisis-hit economies in East Asia.

The Philippines stands to get $3 billion in short-term loans and another $3 billion in long-term loans from the fund, according to Finance Secretary Edgardo Espiritu.

Espiritu also said the request to use Miyazawa Funds must come from the government task force for its rehabilitation of PAL, the Securities and Exchange Commission and PAL management.