PAL Negotiations: Cathay Doesn't Deserve that Flak

Manila Bulletin

Wednesday, December 2, 1998

By TONY ANTONIO

In the last few days, there were a lot of reports and coffee shop talks on the on-going negotiations between the Philippine Airlines (PAL) and Cathay Pacific Airways on the possible entry of the Hong Kong-based airline as an investor in our country’s flag carrier. Many of the reports are confusing and misleading, and some airline industry leaders suspect that these were “planted” in an attempt to derail the negotiations.

Some of the reports are obviously intended to make Cathay Pacific look bad in the eyes  of the Filipino People. It seems to us that these are uncalled for because in the first place, Cathay did not make an offer to invest in beleaguered PAL. The fact is that Cathay was invited to infuse substantial investments  into the perennial loser PAL.

The fresh funds are badly needed because PAL foreign creditors are all preparing to foreclose on PAL assets, including its planes and airbuses. Since last June, PAL has stopped paying its creditors who were told that they will be paid soon as a new PAL partner comes in.

It was recalled that upon the request of the Philippine government, Cathay got involved in PAL last Sept. 28 when it undertook at cost charter flights to the sought. This was the time when PAL planes were grounded to a halt as a result of the strike staged by the pilots.

For its benevolence, Cathay received a commendation from  the Davao City government and “thank you” letters from the individuals and private firms. They appreciated the fact that Cathay was there when its services were needed most.

Now these unsavory reports about Cathay. This is unfair because Cathay does not deserve that flak. It seems that the reason, if we can call it “reason” for the attacks on Cathay is a provision in its investment offer that it wants a say in the management of PAL. We think this is a reasonable provision. If you are investing much money, you would also demand the same thing because you would want to be assured that your money is not wasted.

The other day, we talked over the phone to a Cathay executive who was understandably indignant over the unfounded reports.

On the claim that Cathay is insisting on the retrenchment of 200 pilots, the executive said this is a simple lie. He explained: “How can we do that? At present, PAL has 208 pilots, and if we retrench 200, there would only be eight pilots left. You can’t simply run as airline as big as PAL with only pilots.”

On the reports that it is going to dismiss 3,000 ground personnel, the executive clarified that the retrenchment plan is based on Plan 22 formulated by PAL last September during which Cathay had no involvement at all in the Philippine flag carrier. He said that Cathay is to manage PAL in the future, it might “need to retrench some ground staff, but definitely it would be far fewer  than 3,000 and this would be done on a voluntary basis.”

The executive did not mince words about the false reports. He said: “Cathay is distressed by these incorrect reports which it finds damaging to its good name and reputation.”

For some hidden agenda and dark motive, certain quarters want the Cathay-PAL negotiations to collapse. If that happens, the ultimate losers would be the Filipino people.