BIZ BUZZ: PAL’s silver lining

Market watchers had been waiting with bated breath for Philippine Airlines (PAL) to release their 2020 financial performance and when they finally did last week, the hand wringing was justified.

The Lucio Tan-owned airline reported a comprehensive loss of P73 billion—or close to $1.5 billion at current exchange rates—on the back of a two-thirds decline in revenues last year due to the COVID-19 pandemic.

But it seems that what is more interesting and more important to PAL’s business partners and creditors is the future it is now in the process of mapping.

And from what Biz Buzz hears, the future of the airline is not as bad as the numbers on the surface suggest. For sure, the path ahead is a challenging uphill slog, but it is by no means chaotic or panic-filled as had initially been feared by many observers.

For one, we understand that PAL will finally file for Chapter 11 protection in US courts “within two to three weeks.” This means that the airline will receive legal protection against any creditor who may want to move independently and seize any loan collaterals (mainly aircraft).

This is important because the idea of the Chapter 11 filing is to give the airline the opportunity to dig itself out of its P73-billion hole, and it can only do that if it has the means to continue operating. That also means having a fleet of aircraft with which it can continue to repatriate overseas Filipino workers and transport vital COVID-19 vaccines and other essential cargo.

Biz Buzz heard that talks between PAL and its foreign creditors have already been concluded and “agreements in principle” have already been reached. All parties are now in the “documentation” stage, meaning all that remains are formalities of crossing the T’s and dotting the I’s.

Most importantly, however, we’re told that Tan—having recently survived COVID-19—is preparing once more to infuse more capital into the airline to help it weather the turbulence it currently finds itself in.

Just exactly how much money he’ll put in remains to be seen, but the good news is that there will be less problems as to how those resources will be used, thanks to a recent move to bring all the airline’s board members and management into harmony (meaning, some contentious personalities were excluded from the group).

And perhaps, best of all, “Kapitan” (the nickname given to Tan) is giving PAL president Gilbert Santa Maria free rein to run the airline professionally.

So the question now is … will all that be enough to get PAL airborne? We’ll know soon enough. Abangan.

—Daxim L. Lucas

Magic 14

For the first time in its postdemutualization history, the Philippine Stock Exchange (PSE) will have fewer candidates vis-a-vis the board seats that are up for grabs in its upcoming annual stockholders’ meeting.

With Venture Securities’ Eusebio Tanco withdrawing his candidacy (citing delicadeza amid the sanctions imposed by the Securities and Exchange Commission in relation to the R&L Investments Inc. stock fraud controversy), there are now only 14 candidates versus the 15 board seats available. The elections will just thus be a formality.

Since the official nomination period had ended, the PSE’s nomination and elections committee (Nomelec) last week decided against filling up the slot vacated by Tanco. “Because of time constraints, with the annual stockholders’ meeting to be held on July 2, our Nomelec decided to leave a seat vacant,” a PSE source said.

With Tanco out of the picture, there will just be four broker representatives on the PSE board, namely: Diosdado Arroyo, Eddie Gobing, Wilson Sy and Vivian Yuchengco, all of whom are reelectionists.

It’s ironic because in the past, some people will fight tooth and nail to get one of the seats reserved for brokers, a number that has shrunk over the years amid regulators’ pressure to increase the representation of independent directors. Now, the PSE has no choice but to keep one seat vacant.

Outside the brokerage industry, there will be two newcomers to the PSE board. One of them is Tomas Alcantara, former Board of Investments chief and retired CEO of Alsons Consolidated, who will represent other market participants. The other is Gilberto “Gibo” Teodoro, formerly defense secretary during the Macapagal-Arroyo administration and a presidential contender during the 2010 elections, who will be an independent director.

Alcantara and Teodoro will replace Roberto Cecilio Lim and Edgardo Lacson (of Philippine Chamber of Commerce and Industries).

Meanwhile, PLDT’s Anabelle Chua will continue to represent corporate issuers, while the GSIS’ Rolando Macasaet and SMC Retirement Plan’s Ferdinand Constantino will represent those on the “buy” side, or the investors.

PSE president Ramon Monzon will take one seat, while PSE chair Jose Pardo will take another.

Other independent directors who will continue to serve at the board are retired bankers Consuelo Garcia and Vicente Panlilio and former Supreme Court Chief Justice Teresita De Castro.

—Doris Dumlao-Abadilla INQ

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