PAL brings down foreign debt, mulls exiting rehab plan

Flag carrier Philippine Airlines (PAL) is now studying the possibility of exiting in its rehabilitation plan after bringing down its foreign debt to more than US$900 million. Jaime Bautista, president of PAL in a weekend luncheon briefing newsmen, said they are looking at the option of departing from the rehabilitation plan, which they filed in 1998 when its employees staged a strike that paralyzed its operations that crippled company operations. “Exit is an option," said Bautista. However, he said that as of this time they have not strike any agreement with their creditors. “We have yet to get our creditors’ nod," he admitted. From US$2.3 billion, Bautista said PAL was able to bring down their debt to US$953 million as of March 31, 2007. “By next year [PAL] will pay another US$100 million," he added. The flag carrier was previously owned and managed by the government. It was privatized in 1992. Currently, it is majority owned by PAL Holdings with about 84.47 stakes. PAL reported a net income of $140.3 million for its financial year ending March 31, 2007, the largest profit in its 66-year history and an affirmation of the flag carrier's robust financial health eight years into its restructuring program. "These solid results, not just from last fiscal year but over the past eight years under restructuring, confirm that PAL is fully recovered and is now firmly on track towards long term profitability," added Bautista. "We are consolidating these gains by reinvesting them in the business in order to further improve our products and services, which is critical in shoring up our competitive position in the liberalized aviation milieu," he said. The group of tobacco magnate Lucio Tan won the bidding for the privatization of PAL 19 years ago, however, because of its exceeding foreign debts and differences, it started to bleed. Though, PAL management initiated cost-cutting measures to cope with the impending bankruptcy, employees, however, opposed these measures and staged a strike that disrupted both the domestic and international operations. The government then intervened with the Securities and Exchange Commission (SEC) ordering PAL to submit its rehabilitation plan, which provided the infusion of US$200 million into the company. Bautista earlier noted that since entering an SEC-supervised rehabilitation framework in June 1999, PAL has consistently posted good revenue an indication that it can sustain its financial viability. Bautista said the profit plow-back is manifested by PAL's ongoing modernization programs for both its narrow-body and wide-body fleets. Currently, the company is expecting the arrival of their new Airbus A320 by end of this year and until 2010, which is part of their modernization program. So far 16 out of the 20 aircrafts have been delivered, Bautista said with four due later this year and five more in 2008, in addition to five option aircraft. PAL has also signed for the acquisition of six Boeing 777-300ER aircraft, comprising four firm orders and two leased units, to boost its long-haul operations to North America and other destinations. Bautista said PAL will invest from $50 to $100 million to reconfigure and refurbish cabin interiors on its existing wide-body fleet. He said this new airplanes will be dispatched for their long-haul flights such as United States, Europe and in Australia. However, Bautista said they are still gauging their options on whether to operate again in Europe and in the East Coast. “If economics can show us very profitable [returns], then we can consider flying to East Coast or even consider flying back to Europe," he explained. It was in 1998 when PAL pulled out their flights to Europe and East Coast because of the excess capacity. - GMANews.TV