The future at Philippines Airlines (PAL) of five-member consulting team Regent Star Services is in doubt as talks between the carrier and Lufthansa Consulting gain ground. Reports from Manila indicate that the contracts of the five ex-Cathay Pacific Airways executives, led by Peter Foster, are likely to be terminated on the grounds of unspecified "violations".

PAL is not available to comment on the reports that come as Lufthansa Consulting is believed to be reaching an advanced stage in talks on a contract to support the carrier. Lufthansa Technik is also in talks on becoming a shareholder in PAL's Manila-based engineering arm.

The five-member team established Regent Star to support PAL as senior advisors on five-year contracts after negotiations on Cathay taking a major equity stake in the carrier broke down at the end of last year.

The infusion of more than $100 million was expected to follow Cathay taking a 40% stake in the carrier - the securing of a foreign strategic partner was made central to PAL's early efforts at rehabilitation but all talks with outside carriers failed.

A later stand-alone plan, formulated during Regent's tenure, was eventually ratified by the Philippine Securities and Exchange Commission (SEC) last month after creditors representing 55% of the carrier's $2.2 billion debt approved it.

The US Export Import Bank rejected it, however, after PAL chairman, Lucio Tan, reinstated himself as chief executive officer in April after stepping down in January.

Tan is widely identified with PAL's fall into receivership last year, and is known to be hostile to the ongoing role of Regent Star at the carrier.

Tan ensured his position at PAL by securing the $200 million required under the carrier's rehabilitation plan just one day before a 4 June SEC deadline for the infusion, providing $100 million of personal funds and the remaining equity from a group of local and Hong Kong-based investors.

Source: Flight Daily News