Former PAL chief still bullish on PH flag carrier
Former Philippine Airlines (PAL) president Avelino Zapanta said it would be a mistake to write off the flag carrier during its biggest crisis yet.
As creditors weigh PAL’s prospects ahead of the crucial filing of Chapter 11 reorganization proceedings in the United States, Zapanta said the airline’s long history offered clues to its endurance and path to recovery after the COVID-19 pandemic ends.
“If I were the creditors, I would bet on PAL’s resiliency to overcome this,” he told the Inquirer in an interview on Friday.
“As more vaccines come to the Philippines, the market will come back. PAL has the market otherwise it would not have survived the past 80 years,” he added.
Zapanta led PAL during a previous era of turmoil. He was president of the company during its 1999 rehabilitation in the aftermath of the Asian Financial Crisis.
The present downturn, however, was global in nature and PAL’s struggles were shared by airlines around the world.
In some cases, this resulted in bailouts from governments while others opted to file similar Chapter 11 petitions in the United States..
A wave of airline startups are also emerging in a bid to capitalize on the uncertainty, given large numbers of grounded fleets and unemployed pilots and cabin crew.
While this might lure some aircraft lessors and creditors, Zapanta said most were better off staying with established carriers rather than “losing everything if they bet on new entrants.”
A Chapter 11 filing would help ensure PAL’s continued operations and give the airline space to carry out a restructuring program estimated as much as $5 billion.
It comes amid a brutal year for the industry. PAL cut a third of its workforce last March while parent company PAL Holdings Inc. saw losses from January to September last year triple to P28.85 billion.
The company, owned by taipan Lucio Tan with Japan’s ANA Holdings as a minority shareholder, also recorded a capital deficiency of P24 billion, reversing an equity of P4.9 billion the previous year.
The PAL Group has yet to release earnings for the full year of 2020.
“The public should understand a Chapter 11 is protection for Philippine Airlines so it might be able to operate normally without intervention such as lessors pulling out the aircraft or suppliers pulling out spare parts,” Zapanta said.
Similar to its last rehabilitation, PAL would return and rebuild its network after the pandemic, he added.
“They don’t have to go back as big as they were before,” Zapanta said. “After our [1999] rehab, we were less than one half of what we had. When I was there, we had to reinaugurate destinations that we stopped during that period of difficulty.”
Zapanta, who sealed an agreement with employees for years of industrial peace or no strikes and work disruptions, retired in 2004 after helping the airline achieve consistent profitability.
PAL’s comeback surprised even Tan, who had successfully raised $200 million to secure control of the airline and meet conditions of the rehabilitation program.
“At that point in time, the mindset of Lucio Tan was PAL would never be able to recover from the debts it fell into,” Zapanta said. “He thought his $200 million would be gone in three months and not way beyond that period.”
PAL’s current management, led by president Gilbert Santa Maria, would likely succeed in the negotiations with creditors, he added.
“The track record of PAL shows because it’s still very much around. The track record of PAL is it’s resilient,” Zapanta said. INQ
