Ramos sets deadline in PAL battle
PRESIDENT Fidel Ramos says he has given two local tycoons a deadline to resolve the heated ownership struggle over Philippine Airlines.
''They have been given some time by me to work out their financial problems, because that's what this is all about,'' Mr Ramos said at his weekly press conference.
Mr Ramos suggested he will not intervene until he receives a progress report later this week on the ownership struggle.
''I shall await their findings and recommendations,'' Mr Ramos said, adding that several meetings between the competing factions had been held over the past few days.
The statement came amid fresh signs that PAL chairman Antonio Cojuangco, head of a telecommunications monopoly, inched closer towards regaining control over the recently privatised airline from a secret partner.
According to published reports, Mr Cojuangco has raised enough money to buy out tobacco king Lucio Tan's four billion peso (about HK$1.24 billion) investment in PR Holdings, the Cojuangco-led consortium that bought 67 per cent of the airline last year for US$369 million.
Central Bank governor Jose Cuisia, a government representative on the board of PAL, said Mr Cojuangco planned to raise half of the four billion pesos from friends and the remainder through a public offering.
''These are the possible solution that the Cojuangcos are considering in order to put an end to this corporate war,'' Mr Cuisa told reporters.
PR Holdings has a 67 per cent stake in the airline and the government owns a 33 per cent stake.
Mr Ramos said he had set down three broad guidelines for the resolution of the dispute, which has threatened the rehabilitation of the airline.
''My guideline is let us not allow the Philippine Airlines as the national flag carrier to deteriorate.
''Second, it must not lose its competitiveness in the very competitive airline industry worldwide.
''And, third, I said that the airline must continue to be efficient and effective in serving our people and its passengers everywhere.'' Mr Ramos added: ''We want them to solve their corporate problems within the corporation, as a board of directors which has the say in the internal affairs of the corporation.'' Mr Cojuangco's relationship with Mr Tan began to sour late last year when, unknown to the latter, the PAL board approved a US$1.6 billion order for six Airbus Industrie jets and four Boeing 747-400s.
Mr Tan, who is against the jet order on the grounds that it will bury the airline in debt, broke ranks because he had been promised a say in all major airline decisions.
The tobacco tycoon responded by attempting to oust Mr Cojuangco and take over the airline.
The imbroglio has surfaced just as the airline is about to embark on its first Eurobond issue, a US$60 million to $100 million offering. Analysts said the turmoil also threatens to derail the re-fleeting programme.
Last year PAL declared a net income of 1.1 billion pesos on revenue of 24.4 billion pesos. This is an improvement over the previous year, when it lost 3.33 billion pesos. Analysts are projecting a profit of 1.4 billion pesos in 1993 and two billion pesos in 1994.
Mr Ramos has stepped into another major problem with the announcement that his government will appeal against a Supreme Court order stopping an increase in the power tariff of 18 centavos per kilowatt hour, which is set to take effect this month.
Mr Ramos told the news conference he would urge the Energy Regulatory Board to decide quickly on a pending government petition to raise power rates.
The National Power Corp (NPC) was forced to scale down net profit forecasts to 1.5 billion pesos from 5.8 billion pesos after the order was issued by the court last Thursday.
It also put at risk loan opportunities of up to $900 million in 1993, officials said.