State aerospace firm suffering from P177-M operating loss, COA says

The Commission on Audit (COA) has recommended the review of the existence of the Philippine Aerospace Development Corporation (PADC) after the state-run firm incurred operational losses worth P177.9 million over the last six years as it failed to contribute to the country's aviation industry.

"PADC is no longer performing its core mandate, which warrants a comprehensive review of its structure, policies, financial capability and business market to determine the sustainability and economic viability of its continued existence," the COA said in its 2018 audit report.

Presidential Decree No. 286 created the PADC in 1973 to develop the aviation and aerospace industry, with the goal of providing reliable technical and maintenance support systems to both airline companies and the government, especially the military.

However, the COA said the government-owned corporation only turned a profit in the 80s and early 90s, and has started to lose money since the late 90s.

The COA said the PADC already incurred losses worth P149.6 million from 2013 to 2017, while the operating loss in 2018 amounted to P28.29 million. It said the corporation only had revenues of P5.9 million last year but incurred P34.2 million in expenses.

The main source of income of the PADC comes from the lease of budget airline Cebu Pacific and eight others for three of its hangars in the property of the Manila International Airport Authority, according to the COA.

It said rental payments for the hangars in 2018 totaled P43.45 million, which compensated PDAC's current operating loss.

Furthermore, the COA said revenue opportunities for the PADC have been limited due to its poor resources.

Among these factors are its ongoing tax dispute with the Bureau of Internal Revenue (BIR), its expired accreditation at the Civil Aviation Authority of the Philippines (CAAP), poor facilities and lack of landline and internet connections, and unserviceable vehicles.

The COA said the PADC was also blacklisted by the Philippine Navy for its failure to comply with its contractual obligations in 2015, while aviation schools no longer need its services after creating their own maintenance facilities.

"With these in view, it is clear that PADC is no longer performing and carrying-out its principal/core mandate," the commission said.

The COA urged the PADC to review the current condition of the aviation industry and assess whether it can still compete with other suppliers, based on its financial position, existing facilities, and technical capability.

In its comment, the PADC management said its president Steve Victor Siclot directed concerned personnel to settle the tax liabilities with the BIR and submit all the requirements needed for the renewal of its accreditation with the CAAP.

The PADC said the blacklist order has been shelved and it has likewise signed a memorandum of agreement with the Philippine State College of Aeronautics for the maintenance of their aircraft.

The PADC management added it expects "major developments" after its transfer to the Department of National Defense on March 15, 2019. — MDM, GMA News