PAL eyes profit in three years - Philippine Airlines

Business Asia, Oct 19, 1998

Manila--The embattled Philippine Airlines (PAL) could return to profit in three years after resuming operations following a two-week shutdown, according to a senior company official.

PAL chief financial officer Mr Jaime Bautista said the rehabilitation plan would entail a capital injection, a fleet reduction, manpower adjustments, a spin-off programme and a debt repayment scheme.

"We have asked them (creditors) to look at the rehabilitation plan. Under the plan, PAL will be a relatively smaller airline than it used to be," Mr Bautista said.

"It will consist of a fleet of 22 aeroplanes with a smaller manpower, depending on our ability to spin off some of our ancillary business.

"The initial figures show that the first two years will be reported as losing operations --meaning there will be net losses, but there will also be income from operations. In the third year, the airline becomes profitable."

The 57-year-old airline--Asia's oldest--shut down on September 23 after talks between management and labour broke down.

The workers later accepted a 10-year suspension of their collective bargaining agreement in exchange for 20 per cent of the equity, paving the way for the resumption of domestic operations.

PAL has an existing fleet of 51 planes and about 8600 employees. PAL owes about US$2 billion to 9000 creditors.