PAL Still the Airline for Filipinos—Erap

Philippine Daily Inquirer 

Tuesday, December 29, 1998

By Armand Nocum

PHILIPPINE Airlines continues to be President Estrada’s pet airline.

“PAL is still the airline that is looked up to by the majority of the (Filipino) public,” the President told reporters during a hastily called press conference at the Ninoy Aquino International Airport.

In light of criticisms that his administration was biased toward PAL., Mr. Estrada said only the flag carrier had the resources to fly people and cargo all over the Philippines.

The "other airlines are just small and they cannot cover the whole Philippine archipelago," he said during a program at Naia where he welcomed the three returning overseas Filipino workers.

Mr. Estrada said this even in the presence of Air Philippines majority owner William Gatchalian, the President's adviser on OFW affairs.

Gatchalian earlier slammed the government for its plan to use part of the Miyazawa Fund to rehabilitate PAL, which is owned by Lucio Tan, one of biggest contributors to the Estrada presidential campaign.

The $30 billion fund was proposed by Japanese Finance Minister Kiichi Miyazawa in October to help Asian countries combat the economic crisis.

"We also deserve an incentive. If PAL is given part of the Miya­zawa Fund, we should have part of it," Gatchalian earlier told Naia reporters.

Financial experts have also hit the plan, saying it would send the "wrong signals” to the Japanese government because Tan was Mr. Estrada’s supporter.

The President said that the plan had not been set aside as it remained an "alternative" to the search for a strategic partner for PAL.

"We will fly our best to see to it that PAL will continue its opera­tion,” he said.

Earlier this month Finance Secretary Edgardo Espiritu had proposed that Manila seek $I50 million for the rehabilitation of PAL from the Miyazawa Fund.

PAL management had prepared a rehabilitation plan which called for an infusion of $150 million in new money to keep PAL flying.

Some of this money was ex­pected to come from a strategic foreign investor but the failure of the talks with Cathay Pacific Airways and Northwest Airlines, has put the plan in peril, raising the possibility that PAL may have to close down if no new financing is found.

The President meanwhile, said he was still hopeful PAL could still forge an agreement with Cathay Pacific despite the collapse of negotiations.

Asked about earlier statements that he would meet with Tan and Cathay Pacific executives to revive the stalled talks between them Mr. Estrada told reporters "it (the meeting) hasn't happened yet but they're still negotiating.”

"I hope they will settle it…next month," the President added without giving details.

In Hong Kong, a spokesperson for Cathay Pacific said: "We are not involved in any negotiations with PAL."

PAL, which closed down its 57-year-old operations for two weeks in September because of a $2.1-billion debt and labor problems, has already slashed its labor force and its flights and cancelled deliveries of new planes to try to cut cost. With a report from AFP.