After exiting from the bankruptcy protection (Chapter 11) proceedings, the Department of Finance (DOF) said the government is ready to discuss any financing request coming from flag-carrier Philippine Airlines (PAL).
Finance Secretary Carlos G. Dominguez III said on Saturday, Jan. 1, that the DOF along with its attached financial institutions are “always ready to discuss requests” of the national flag carrier.
“The DOF and its attached agencies are always ready to discuss requests of PAL and any in the private sector,” Dominguez told reporters.
To recall, Dominguez said in September that state-owned lenders, Land Bank of the Philippines and Development Bank (DBP), had deferred plans to extend financing to PAL following the filing of bankruptcy protection in the United States.
On Friday night, Dec. 31, PAL announced that it has exited from voluntary Chapter 11 proceedings, slashing over $2 billion in debts.
"Philippine Airlines stands ready to help grow back the Philippines’ local and international air travel markets in ways that renew the tourism industry, serve the needs of global citizens including overseas Filipinos, and contribute actively to the recovery of the Philippine economy," said PAL Director Lucio C. Tan III, quoting PAL Chairman and CEO Lucio C. Tan.
"Our mission as the flag carrier matters more than ever, and we are thankful for the chance to rebound from the pandemic and continue to fulfill this mission as best as we can," he added.
Before the bankruptcy filing, Dominguez disclosed that Land Bank and DBP were in discussion with PAL and Cebu Pacific, two of the country’s largest airliners, for possible financing.
According to Dominguez, Cebu Pacific within a year put in a deal that conformed with the government’s “principles,” among them is an assurance that the state will not end owning the airline, among others.
For this reason, the DOF chief said that Land Bank and DBP participated in the private sector-led financing package for Cebu Pacific amounting to P16 billion.
“Although we are not the biggest financiers , we are the keystone of finance. You know the keystone in an arch is the stone without which nothing happens,” he explained.
But in the case of PAL, Dominguez said the airline company “took a different path.”
“They took a path of filing for bankruptcy first,” Dominguez said. “In that case, aside from the conditions I set up for Cebu Pacific, the additional condition is that we will have to wait for the result of the bankruptcy proceedings.”
“I do not want Land Bank and DBP to go in and finance a company that is filing for bankruptcy and we don't know how it will turn out. You know, bankruptcy courts do not necessarily always follow what we want,” he added.