Boosted by sustained healthy profits, Philippine Airlines will exit receivership much sooner than its original year-end target, even as it explores new capitalization sources, it’s parent company PAL Holdings has claimed. PAL now expects to move out of receivership in October, its president Jaime J. Bautista said following the annual stockholders meeting of PAL Holdings, Inc., the corporate majority owner of the airline.
PAL announced last month it was in the process of obtaining approval from the Securities and Exchange Commission to graduate from a rehabilitation program it entered in June 1998 after absorbing significant losses.
Last September 14, 2007, the Permanent Rehabilitation Receiver (PRR) of PAL - the three-man government-assigned committee that monitors PAL’s compliance to the rehabilitation plan - favorably endorsed the application of PAL to exit from receivership.
“The PRR is pleased to report to the (SEC) that the case of PAL is truly a showcase to the entire Philippine business community of a successful implementation of a rehabilitation proceeding ... Thus ... the PRR favorably endorses approval of the proposal of PAL Management to exit from rehabilitation,” wrote Renato Z. Francisco, Carlos Alindada and Monico Jacob, members of the PRR.
Markedly improved financial performance under receivership, including an eight-year streak of operational profits and cumulative net profits, meant that PAL had fully recovered and was ready to exit the SEC-supervised framework by December 2007.
Better-than-expected financial results for the April-to-June quarter, where PAL earned a profit of $34.5 million to go with the record $140.3 million profit for the year to March 31, prompted the flag carrier to move up the exit date to October.
To sustain its robust position, PAL Holdings will continue to “look seriously at financing options to further improve its capitalization and fund the fleet renewal programs of its subsidiary, Philippine Airlines,” PAL president Jaime J. Bautista said.
At Monday’s stockholders meeting, Bautista, also PAL Holdings president, reported the ballooning of the company’s net income to P7 billion on an asset base of P93 billion in the 2006-2007 fiscal year that ended last March 31.
These represented massive increases from the token levels of a year earlier, and was brought about by the acquisition of a majority interest in Philippine Airlines in September 2006.
This was accomplished when PAL Holdings acquired six holding companies that collectively own 81.57% of PAL. Separately, PAL Holdings also owns 3.1% of PAL through a subsidiary, PR Holdings, Inc.
In all, PAL Holdings has an aggregate 84.7% interest in the flag carrier.
PAL Holdings was incorporated on May 10, 1930 as Baguio Gold Mining Company. In 1996, its name was amended to Baguio Gold Holdings Corp. and its primary purpose revised from mining to that of a holding company.
The company was acquired by the Lucio Tan Group in 2000 and in January 2007, its corporate name was changed to PAL Holdings, Inc. The company is headed by Dr. Lucio C. Tan as chairman, Bautista as president, Mariano C. Tanenglian as treasurer, Ma. Cecilia L. Pesayco as corporate secretary and Susan T. Lee as chief finance officer.
The 11-man board of directors includes Dr. Tan, Bautista, Tanenglian, Harry C. Tan, Lucio K. Tan, Jr., Michael G. Tan, Wilson T. Young, Macario U. Te, Juanita Tan Lee, and independent directors Antonino L. Alindogan, Jr. and Enrique O. Cheng.