DOF asks private banks’ help in bailing out troubled airlines

Published October 8, 2020, 5:00 AM

by Chino S. Leyco

President Duterte’s chief economic manger admitted yesterday that the government cannot provide the entire financial relief needed by the aviation industry to save domestic  airlines badly hit by the coronavirus pandemic.

Finance Secretary Carlos G. Dominguez III (DOF photo / Howard Felipe)
Finance Secretary Carlos G. Dominguez III (DOF photo / Howard Felipe)

Speaking at the virtual Philippine Business Conference and Expo, Finance Secretary Carlos G. Dominguez III said that government assistance to troubled airline companies will be just a portion to save the industry from its imminent collapse.

Dominguez said that private banks should take the heavier responsibility to relieve the tremendous pressure on airlines brought about by the severe travel restrictions imposed by most governments amid the pandemic.

“We are in deep discussions with them [airliners] and we are prepared to participate in the assistance to the airline industry,” Dominguez said. “But let me point out that whatever assistance we have, or we are going to provide, will part only of the entire process.”

“The private sector banks have to cough up the majority of the assistance,” he added.

In particular, Dominguez said that private creditors should be the ones evaluate the airline companies’ credit risks.

“We will rely on the participation of private banks, and we will support their efforts to help revive the industry. But I have to point out that the government does not want to end up owning their airlines,” the finance chief said.

Dominguez said the DOF has been in discussions with airline officials for around six-months, but given the uncertainly, the private companies cannot provide the government their final plans to revive their businesses.

“They have prepared at least four or five plans for their finances, and the reason they say is because the situation is changing so quickly that they have to keep on revising their plans,” he said.

In July, Dominguez said the DOF was studying the condition of airline companies affected by the COVID-19 pandemic and a possible assistance that could be extended to them by the government.

Flag-carrier Philippine Airlines and other local airline companies have sought government help as measures imposed globally to contain the spread of the disease affected their operations.