Paul Lewis/SINGAPORE
Philippine Airlines (PAL) is in a race against time to convince Cathay Pacific Airways and other potential new investors to support the financially stricken national carrier ahead of submitting a rescue plan to the country's Securities Exchange Commission (SEC) on 21 November.
Cathay Pacific, along with Northwest Airlines and Singapore Airlines, have been identified by the Philippines Government as potential partners. PAL has made it clear that any proposed foreign airline participation will have to include an urgently needed injection of cash, with up to 40% of the company's stock on offer.
"An infusion of cash is essential. We need equity investment," states PAL executive vice-president Monolo Aquino, speaking exclusively to Flight International. "It's Cathay which is heading the due diligence-we expect Cathay to make a proposal before the end of this month", he adds.
Cathay confirms that "-talks are ongoing, but nothing has been finalised". An equity acquisition in PAL is just one option now under study, says an official, adding that any financial investment would in turn have to be accompanied by full participation in the management of the Philippine carrier.
A major concern for Cathay is the increasing number of creditors demanding the repayment of loans and the return of leased aircraft from PAL. The US Exim bank has already seized two of PAL's Boeing 747-400s in the USA and Hong Kong, while General Electric Capital is petitioning the Securities Exchange Commission (SEC) for the return of four leased 737-300s.
While PAL has the temporary protection of the SEC against creditors inside the Philippines, aircraft operating outside the country, such as its two remaining 747-400s, are liable to be seized. For this reason, as well as that of poor ticket sales, PAL postponed the planned 15 October restart of international flights.
"This is an issue," says Aquino. "While we can fly the Airbus A340 across the Pacific- the 747 would be a our preferred choice," he says.
PAL has opened talks with Exim and claims to have reached an accommodation with the European Credit Agency on eight A330s and four A340-300s. Aquino adds: "Some aircraft will be stored in France and the Middle East."
Source: Flight International
