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Philippine gov’t urged to bolster PAL, airlines

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Philippine Airlines (PAL) filed a Chapter 11 bankruptcy petition in the Southern District of New York in the US to pave the way for the forgiveness of $2.1 billion in aircraft-related debts and obligations. PHILIPPINE DAILY INQUIRER

Philippine gov’t urged to bolster PAL, airlines

Philippine lawmakers on September 5 called on the government to support the country’s embattled flag carrier during its restructuring process and come to the aid of other airlines to help them weather the economic turbulence caused by the Covid-19 pandemic.

Senate tourism committee chair Senator Nancy Binay said the government could show its “economic patriotism” through various steps that its agencies could take to help Philippine Airlines (PAL) after the carrier filed a Chapter 11 bankruptcy petition in the Southern District of New York in the US to pave the way for the forgiveness of $2.1 billion in aircraft-related debts and obligations.

“On the part of the [Department of Transportation (DoT)], perhaps, instead of payment deferrals, it may waive charges for take-off, landing and parking fees on local airlines while the government has no clear or concrete programme to aid the industry,” she said in a statement to Philippine Daily Inquirer.

“Such as it is, that would be a great help – and this is how economic patriotism works in the time of pandemic. Filipino first,” Binay said.

The DoT, for its part, “can help correct any misinformation, and tell Pinoys [Filipinos] and foreign travellers that there’s nothing to worry and they can continue to fly PAL”, she said, adding that many people might think that they could no longer book PAL for their travels.

The airline had earlier assured the public that flights would not be interrupted and all valid tickets, vouchers, benefits and mileage rewards would be honoured.

It also committed to build up its flight operations and continue crucial vaccine deliveries and repatriation flights for stranded Filipinos around the world.

Senator Joel Villanueva agreed that the government should consider coming to the aid not only of PAL but other struggling local airlines.

“We fully understand that Covid has created financial headwinds and no airline in the world has escaped turbulence. Our government should explore assistance on the condition that workers are able to retain their jobs as much as possible,” the chair of the Senate labour committee said.

PAL is hoping for a swift comeback from corporate restructuring as billionaire Lucio Tan, the controlling shareholder of the airline since 1993, said his family would fully back the flag carrier.

PAL chief financial officer Nilo Thaddeus Rodriguez said in a video message posted on the airline’s website that they expected to exit the Chapter 11 process “in a few months”.

Tan, who is PAL chair and CEO, appeared later in the video beside his grandson and PAL director Lucio Tan III.

The son of the late Lucio Tan Jr, who was at the helm of the flag carrier when he died in 2019, delivered his 87-year-old grandfather’s message assuring all stakeholders, passengers and employees that PAL would “keep flying, now and long into the future”.

“On the 80th anniversary of [PAL], my family and I make this renewed commitment to you – we will complete the recovery of [the airline],” he said.

Saddled with growing financial losses before the pandemic, PAL was forced into survival mode when Covid-19 arrived early last year, disrupting tens of thousands of flights that affected more than a million passengers.

Recounting the extraordinary measures PAL took to stretch dwindling finances, company president Gilbert Santa Maria said lessors agreed to defer $360 million in obligations while Tan provided $130 million in emergency liquidity.

The company also raised $70 million from the sale of an asset while employees pitched in $60 million through voluntary pay cuts and extended leaves without pay.

Dexter Lee, PAL senior vice-president for strategy and planning, said they also planned to boost domestic flights and add China and Australia trips once restrictions have eased. The airline would also continue to offer codeshare and interline partnerships with other commercial carriers.

While it was possible for PAL to streamline its labour force following the company’s filing of bankruptcy, a lawmaker on September 5 said its effect might only be “minimal”, but One Patriotic Coalition of Marginalised Nationals (1-Pacman) Representative Enrico Pineda reminded PAL to adhere to labour laws if it decided to lay off workers.

Pineda said in a Viber message to Philippine Daily Inquirer that the resumption of flights to other countries could hopefully “help the airline get back on its feet so that it can retain its workers”.

In a statement on September 4, House tax chief Joey Salceda called for a review of Republic Act No 10142, or the Financial Rehabilitation and Insolvency Act (Fria), due to anticipated insolvencies post-Covid-19.

He noted that a similar measure under Philippine law exists under Chapter 2 of the Fria, but “given the serial slowness of the country’s judicial process, the process might come too late”.



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