Hopes waning for PAL being saved from closure.
Hopes for averting the scheduled closure of Philippine Airlines (PAL) at midnight Wednesday are waning, with officials saying the government is now focusing its efforts on strengthening other domestic airlines to fill in the vacuum to be created by PAL's closure.
Presidential spokesman Jerry Barican told reporters that the Labor Department is conducting last-ditch conciliation meetings between PAL management and union representatives but that the government is not optimistic the parties can arrive at an agreement.
"Yes, Philippine Airlines is going to close tonight if there's nothing new. If it's just the status quo, then there's no obstacle to Philippine Airlines closing at midnight tonight," Barican said.
"If the meeting produces the hoped-for miracle, then it means that Philippine Airlines will not close, but we are not very optimistic, given the lateness of the hour and the positions the parties have previously taken," he added.
Lucio Tan, PAL's majority stockholder, was mum about prospects of averting the airline's closure. "Wait until midnight, but it is really up to the union," he told reporters, referring to the Philippine Airlines Employees Association, the biggest of PAL's three unions.
Finance Secretary Edgardo Espiritu said the government's offer to extend 1.5 billion pesos (33.66 million U.S. dollars) in bridge loans to the cash-strapped airline is no longer on the table because union members, in a crucial referendum, rejected management's offer, on which PAL was hinging its decision to cease or continue operations.
Airline management earlier announced that it would stop operations at midnight Wednesday after PAL labor unions' rejection of management's offer of 60,000 shares for each employee and three board seats for the unions in exchange for a 10-year suspension of their collective bargaining agreement. The suspension of the labor deal was a condition laid out by prospective investors in the airline, management said.
President Joseph Estrada intervened, holding marathon meetings with the unions and management. But the last blow appeared to have been dealt by Tuesday's referendum result.
"I am just saddened by the result of the referendum (since) it would have been a big help if they voted yes," Executive Secretary Ronaldo Zamora said.
"What we are discussing now is the option to support the other remaining airlines," Espiritu added, saying the capacities of four smaller domestic airlines -- Air Philippines, Cebu Pacific Air, Asian Spirit airlines and GrandAir -- may be upgraded within 30 to 45 days. The upgrade of two cargo airlines Aboitiz and Swift is also being considered.
As an immediate measure, Espiritu said Philippine Air Force planes and all aircraft of corporations the government owns or controls will be made available for vital services such as transporting medicine, health support and transfer of checks, cash and mail.
Espiritu said Estrada has given instructions for the measures to be undertaken to minimize any economic disruption as a result of PAL's closure. The measures were also taken up at a meeting Wednesday at the Presidential Palace attended by cabinet officials and members of Congress.
PAL employees have been holding prayer rallies in Manila and other parts of the country in the hope of saving their airline and livelihoods.
"What we need now is a miracle. I am very, very sad. I never imagined this would happen, not in my wildest dreams," said PAL administrative assistant Rosie Dizon, who has been with the airline for 34 years.
Espiritu said the government will go after the 3.05 billion pesos in financing it has provided to PAL, but it has lost hope that it can still recover the equity investment in the company made through government financial institutions.
He said the loans of 3 billion pesos by Philippine National Bank and 50 million pesos by the Government Service Insurance System are fully covered by collateral, so they will be a priority when PAL starts paying off its creditors, employees and shareholders.
There is little hope, however, of recovering equity investments of four government financial institutions whose total investment accounts for about 10% of PAL's equity, Espiritu said.
The 57-year old airline's financial troubles deepened as a result of the Asian financial crisis that caused its outstanding debt to balloon to 2.1 billion dollars. Management says a pilots strike last June exacerbated the carrier's financial problems.
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|Publication:||Asian Economic News|
|Date:||Sep 28, 1998|
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