The clock was ticking on PAL in May as it rushed to come up with $200 million in new equity by a 4 June deadline set by the country's market regulator.
The airline, in receivership since June last year under a debt of more than $2 billion, was in mid-May said to have been in talks with Middle East concerns on a capital infusion.
At the same time the Philippine Government said it was considering using state funds to assist the carrier, while Lufthansa Consulting was being courted for a possible management contract.
While the government and the airline claimed progress in the search for new cash, PAL suffered a major blow in May when the US Exim bank threatened to seize four Boeing 747-400s used on routes to the USA.
The bank, which has liens over the aircraft and had previously announced conditional support for a rehabilitation plan covering PAL's long-term operations, withdrew its backing in saying that it no longer felt the airline could be returned to profitability.
In a letter to the Philippine Securities and Exchange Commission (SEC), Exim said it was petitioning the US Bankruptcy Court to withdraw all protection given to troubled carrier.
"It is with great sadness that we advise you that we have instructed our counsel to prepare all necessary papers to petition the United States Bankruptcy Court to reconsider its previous decision to grant comity to the PAL Philippine SEC proceedings," it said. "We expressly reserve all rights and remedies including, without limitation, Exim's and the relevant lessor's rights to take action to terminate the leases of Exim-supported aircraft, repossess the same and seek all appropriate remedies following such termination."
The Philippine Government says it is hopeful that the US Bankruptcy Court will continue to offer protection to the airline and the SEC says it will not allow aircraft seizures while it is considering PAL's rehabilitation plan, although its authority is limited to the Philippines. European creditors hold liens over 15 of PAL's 18 other aircraft.
Lucio Tan, airline chairman and majority owner, said in April that he would provide PAL with $100 million in new equity and another $100 million would be secured before the 4 June deadline. None of the promised funds had been made available to the carrier as Airline Business went to press.
Tan, who stepped down as chief executive in January to please creditors, said in promising the $200 million that he had re-appointed himself chief executive and had made a number of senior management changes.
Exim says Tan's management changes are the primary reason for its withdrawal of support for the rehabilitation plan.
Source: Airline Business
