The Department of Finance (DOF) has began its dialogue with the local airlines seeking to get government assistance to ensure the industry’s survival from the onslaught of the coronavirus pandemic.
Finance Secretary Carlos G. Dominguez III said yesterday that the national government is studying various measures to support the struggling aviation sector that has been among the most severely impacted by the COVID-19 crisis.
“We are studying the transportation industry and the conditions of the companies, as well as various alternative approaches,” Dominguez told reporters when asked if the industry-backed P70 billion proposed assistance for the transport sector is fundable.
The P70 billion assistance for the transport sector in 2020 alone is under the P1.3-trillion Accelerated Recovery and Investments Stimulus for the Economy (ARISE) approved by the lower House, which Dominguez had described “we cannot afford.”
Instead of an outright bailout, Dominguez is pushing for the creation of a new government-owned and controlled corporation (GOCC) that will invest in shares of private companies deemed critical to national interest.
He proposed that Land Bank of the Philippines (Land Bank) and Development Bank of the Philippines (DBP) form a holding company that will be authorized to make equity investments in companies now facing solvency problems.
“We are suggesting Land Bank and DBP organize a new GOCC and that GOCC will be capitalized and will be empowered to make investments in companies that are important to the national interest and that need injections of capital,” Dominguez said.
This DOF proposal is now pending in Congress. The creation of a new state-owned company, under the Constitution, requires the approval of lawmakers.
While the DOF awaits for the congressional nod for the new GOCC, Dominguez said they began the consultation with the aviation industry stakeholders to hasten the process of the the law’s implementing rules and regulations.
The Air Carriers Association of the Philippines (ACAP) earlier reported that the three biggest airlines in the country likely incurred P22 billion in net losses in the second quarter alone amid border closures and community quarantine that affected the industry’s operations.
The ACAP, which includes AirAsia Philippines, Cebu Pacific, Philippine Airlines and their affiliates, had also discussed with lawmakers the financial support requirements of the aviation sector to ensure its survival.