bodyType

customContents

entityId

entityUuid

articlePageQuery

filter

article

articleBaseAdvertisingInfoArticle

articleListArticle

articleSeoArticle

hooksArticleAcknowledgementGateOverlayArticle

hooksTrackPageViewArticle

hooksContentInterestArticle

articleLinkingDataContent

hooksAmpRedirectArticle

articleSchemaContent

liveArticle

advertZone

sentiment

contentLock

topics

types

sections

paywallTypes

createdDate

publishedDate

urlAlias

moreOnThisArticles

sponsorType

commentCount

authorLocations

authors

corrections

displaySlideShow

multimediaEmbed

printHeadline

seriesContainer

articleSpeeches

socialHeadline

headline

images

flag

firstTopic

glossary

flattenTypeIds

image

relatedLinks

relatedNewsletters

__typename

sponsor

pdfFiles

seriesReverseOrder

series

disableOffPlatformContent

published

updatedDate

summary

subHeadline

body

keywords

readingTime

customTimezone

liveContents

Cathay Pacific Airways has withdrawn from talks to take control of bankrupt Philippine Airlines (PAL), citing 'irreconcilable differences'.

 Cathay yesterday said discussions were terminated after it became clear that 'a number of major differences' - including management control and PAL's post-restructuring value - could not be resolved.

 The news came as a blow to Philippine President Joseph Estrada, whose office effectively has been brokering the deal to rescue PAL.

 Alternative talks with Northwest Airlines also appear to have collapsed.

 Mr Estrada said he would ask Cathay to reconsider its position.

 Cathay's bid hinged on it gaining management control - something PAL chairman and majority shareholder Lucio Tan is said to be unwilling to concede.

 Sources close to the talks said they effectively broke down last week when Mr Estrada's office issued statements that undermined Cathay's position.

 Cathay yesterday said 'the positions taken by the parties involved and the overall complexity of the situation' meant critical issues could not be resolved.

 'The breakdown of the talks is unfortunate as we really felt we could have made a significant contribution towards the rehabilitation of PAL beneficial to all parties involved,' Cathay Pacific chief operating officer Philip Chen said.

 'We wish PAL well, and we will remain open to future co-operation in other areas of mutual benefit,' he said.

 Talks stumbled last week over a rumoured Cathay plan to lay off an additional 3,000 PAL employees - including some pilots supposedly loyal to the Tan regime.

 But a Cathay spokesman said there was greater disagreement over how much PAL would be worth after a comprehensive debt-restructuring programme was put into place.

 'As the negotiations continued, we began to feel that full management control over PAL's operations would not be possible,' the spokesman also said.

 Cathay and PAL were jointly working on a proposal to restructure US$2.1 billion in debt. PAL shut down for 13 days in September after defaulting on its debt.

 Cathay reportedly felt PAL would lose more than $800 million over the next 10 years, because the restructuring would entail a considerable streamlining of its business.

 PAL said it would lose no more than $200 million over the period.

 As a result, agreement was not reached on the cash portion of Cathay's investment, from which PAL wanted at least $60 million.

 Upon hearing news of Cathay's withdrawal, Mr Estrada said: 'I can ask Cathay Pacific to reconsider their decision. There are still some options left. We just don't give up easily.'  Mr Estrada also confirmed that negotiations with Northwest had broken down.

 'That's what I heard,' he said.

 Some analysts doubted whether PAL had conducted serious talks with parties other than Cathay, saying Mr Estrada's past statements looked more like political bargaining ploys.

 '[Northwest chairman] Gary Wilson and Lucio Tan are said to be friends - how do we know Tan's visits to the US aren't social calls? I've never heard any official statements from Northwest saying they were interested in PAL,' one analyst said.



Cathay aborts PAL rescue bid