The Department of Finance (DOF) said that local airlines have yet to submit the final loan plan to activate their P700 million financial support earmarked under the government’s economic stimulus programs.
Finance Secretary Carlos G. Dominguez III said the amount of support by the two state-owned lenders Development Bank of the Philippines (DBP) and Land Bank of the Philippines will depend on airlines’ financing proposal.
But the DOF chief, who is a former executive of flag-carrier Philippines Airlines, said that none of the local airlines seeking for government support have submitted the complete loan package, as of Monday morning.
“We are awaiting details of the entire financing package so we can determine participation of DBP and LandBank, if any,” Dominguez told reporters when asked about any update on the P700 million loan assistance under the government’s recovery plan.
Under the Bayanihan to Recover as One Act , or Bayanihan II, the government had set aside P9.5 billion for the recovery programs of the transportation sector. Of that amount, the airlines would get around P700 million.
Earlier, Air Carriers Association of the Philippines (ACAP) had asked the government to help the local airline industry that were severely hit by travel restrictions imposed by the government amid the pandemic.
Among interventions being sought by ACAP, comprised of Philippine Airlines, Cebu Pacific and AirAsia Philippines, were guarantees on debt, emergency credit lines, low interest rate, long-term loans, among others.
Last week, Dominguez assured that they are committed to help the aviation sector, but the government cannot provide the entire financial lifeline needed by the industry to weather the ongoing crisis.
Dominguez said that government assistance to troubled airline companies will be just a portion to save their businesses.
He said that private banks should take the heavier responsibility to relieve the tremendous pressure on airlines brought about by the global 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.
Dominguez pointed out that the government has no plan to takeover ownership of the airline companies.
“The government does not want to end up owning the airlines,” he said.