NG adopts hands off policy on PAL issue

The Journal
Friday, December 25, 1998
Bernadette E. Tamayo

The national government (NG) has adopted a hands-off policy on the controversy between Philippine Airlines and its creditors.

President Estrada said it is up to PAL chairman Lucio Tan whether he should seek a reconsideration of the decision of the European creditors rejecting PAL's rehabilitation plan.

The President stressed this point when asked to comment on the European creditors move withdrawing financial support to revive the cash-strapped PAL.

The European creditors include Britain's Export Credits Guarantee Department, German insurance group Hermes and French credit insurer Coface.

“That (PAL rehabilitation) is a private firm. We cannot interfere in the negotiation of private companies," the President told Palace reporters during a chance interview at the Tutuban Mall where he attended the inaugural Bingo Pilipino.

“The government is here only to assist — not to interfere in the negotiations. Unless the interest of the people is affected, that is the time wherein I come in," Mr. Estrada stressed.

The creditors control leases on 12 Airbus jets, which constitute more than half of the 22 planes PAL would continue flying under its survival plan.

The rejection of the European Export Credit Agencies to infuse additional capital to PAL was filed with the Securities and Exchange Commission.

They rejected the plan on the ground that it did not address two key issues — the presence of a strategic partner and infusion of $200 million in new equity.

"Since these crucial elements, despite having been presented to and discussed with PAL, are not included, it will not be possible for the leasers to support the rehabilitation plan as currently drafted," the letter said.@