Andrzej Jeziorski/SINGAPORE
The 9,000-plus creditors of Philippine Airlines (PAL)have been given 15 days to respond to a new rehabilitation plan filed by the airline, after the collapse of rescue talks with other carriers.
Despite the withdrawal at the beginning of December of Cathay Pacific Airways from advanced talks, and Northwest Airlines' refusal to provide an alternative source of financing, PAL submitted a 136-page rehabilitation plan to the country's Securities and Exchange Commission (SEC) in Manila on 7 December.
The plan called for a 6 billion pesos ($150 million) cash injection, and the resumption of overdue payments on debts understood to exceed $2.1 billion.
The plan is subject to approval by PAL creditors, and includes 3.6 billion pesos to be paid by a group of local investors led by Lucio Tan, PAL's chairman and majority shareholder. A further 2.6 billion peros is then to be provided by an unnamed strategic partner within six months.
The proposal backs the idea of eventually bringing in a foreign airline as a partner to offer "operational synergies, management expertise and co-investment". Talks with Cathay, which had been pushing for management control of PAL in return for an investment of up to $100 million, fell apart because of the Philippine Government's insistence that no further cuts be made to the 8,500-strong PAL workforce.
Rumours that Singapore Airlines (SIA) was interested in pursuing a stake in the carrier have been quashed by SIA.
PAL says its new, unilateral rehabilitation plan "-provides a sound basis to undertake a recovery on its own without closing the door on the entry of a strategic partner in future".
Antonio Ocampo, chairman of the SEC-appointed Interim Rehabilitation Receiver committee, says the plan is "- a very sound business and financial plan -[which] provides a strong platform for the airline to recover and become profitable".
The plan includes the reduction of PAL's fleet from its original 53 to 22 aircraft, dropping unprofitable routes, increasing management accountability, disposing of "non-core activities".
With the adoption of the plan, PAL predicts a cash flow in fiscal year 1998-9 of $30 million before financing costs are considered, increasing to $358 million in2002-3.
The airline says that the implementation of some of the initiatives contained in the plan has already resulted in better-than-expected cash flow and load factors in this fiscal year.
PAL has made losses for years, and was forced to close operations temporarily on 23 September after months of disputes with labour unions. Limited services resumed on 7 October.
Source: Flight International
