The Philippine Airlines (PAL) soap opera continued in March and April, with a new episode nearly every day in the carrier's fight for survival.
As of mid-April, Manila's Securities and Exchange Commission (SEC) had rejected a second rehabilitation plan filed by the airline in March, on the grounds that it did not provide details of new investors willing to provide $200 million in equity.
The three-page order also said PAL's revenue forecasts were not drawn up on a "firm and clear basis", while its planned sale of non-core assets was "not firmly defined". The SEC, in ordering a supplemental plan to be filed by 4 May, said: "The revised rehabilitation plan, as submitted, is unacceptable from our point of view. We find the [plan] to be fraught with generalities."
The order came after key unsecured creditors, including Boeing, Chase Manhattan and IATA, called for the SEC to reject the plan, charging that it did not provide for millions of dollars in debts to be repaid to them. Boeing, meanwhile, has filed a claim for more than $100 million in damages from PAL's unilateral cancellation last year of a firm order for seven Boeing 747-400s.
Secured creditors, including European export credit agencies and the US Exim Bank approved the plan, however, saying it was viable as long as a certain conditions were met.
They included the retention of a group of ex-Cathay Pacific Airways executives who were hired in January as advisors remain, until their five-year contracts expired, and that fresh capital be secured by 4 June. Tan resumed the post of chief executive in April and it is rumoured that he wants the advisors out.
At presstime no investor had been named, although Tan had pledged to put together a group of investors and immediately place $100 million in an escrow account - something creditors will not be happy about as they have been demanding major internal management change. The $200 million cash injection would give the new investors a stake of at least 90%. Tan already holds 70%.
Source: Airline Business