Philippine Airlines (PAL) has been given US and Philippine bankruptcy protection until the end of July, allowing the local Securities Exchange Commission (SEC)-appointed "rehabilitation committee" extra time to finalise and present a financial rescue plan.
The troubled national carrier is temporarily shielded by the SEC from any claims made by suppliers or creditors and is also barred from selling or transferring any of its assets exceeding 3 million pesos ($72,640). PAL has debts in excess of 85.1 billion pesos and has been crippled by industrial action since early June. The airline is facing the threat of a walkout by 5,000 ground staff protesting at the restructuring. Meanwhile, efforts have been renewed to secure investment from either Lufthansa or General Electric in the airline's engineering operation.
The airline has already announced a drastic cutback to services, which it is reducing to 21 international and domestic routes operated by 14 aircraft and 200 aircrew (Flight International, 24-30 June). It has laid off 5,000 ground staff and sacked 600 striking pilots out of a total workforce of 13,000.
PAL admits it is having trouble disposing of 27 leased aircraft, including five Airbus Industrie A340-300s and four A330-300s on lease financing with Credit Agricole, three other A340-300s leased from Airbus and three A320s. It wants to sell a further 13 owned aircraft, including six 747s. Airbus has been remarketing five undelivered A320s as well as production positions for three deferred airliners.
Asia's other financially crippled flag carrier, Garuda Indonesia, has dispatched the last of six leased Boeing MD-11s, but is understood to be having second thoughts about disposing of its six A330-330s. The airline has yet to make any proposals to the European banking consortium that is financing the aircraft and it is up to date on its six monthly payments, the last having been made in June.
Garuda is undergoing a top-to-bottom overhaul under its new president, Robby Djohan, and his recently appointed ex-Citibank chief financial officer, Emirsyah Sator. Plans are understood to focus on stripping the carrier down to a "virtual" type airline by selling off its various arms, such as the Garuda maintenance facility and Aerowista catering unit.
Elsewhere in Indonesia, Merpati Nusantara Airlines plans to lease its Bali to Melbourne and Perth routes to Lockheed L-1011-equipped Thai charter operator Orient. The state-owned carrier can no longer operate the services, having been forced to return three leased A310s, along with 10 Fokker F-28s and one BAe 146.
General Electric Capital, in the meantime, is still battling local receivers to repossess two grounded Fokker 100s from bankrupt private operator Sempati Air.
Source: Flight International
