PAL chairman retakes helm, fires executives
Lucio Tan, the controlling shareholder and chairman of bankrupt Philippine Airlines (PAL), has decided to oversee the carrier's turnaround by firing chief executive Luis Juan Virata and appointing himself to the post.
It is uncertain how the management reshuffle will affect the executives poached by PAL from Cathay Pacific Airways - led by Peter Foster, Cathay's former general manager for Taiwan and the Philippines.
Mr Foster - who described himself as PAL's de facto chief executive in January when he was hired - is believed to be at odds with Mr Tan over the airline's running.
Mr Foster was unavailable for comment.
PAL spokesman Rolando Estabillo declined to comment on the rumoured split between Mr Foster and Mr Tan but said the team of advisers led by Mr Foster 'will remain in the same function'.
The news comes as Philippine regulators ordered Mr Tan - who holds a 78 per cent stake in the company - to immediately produce half of the US$200 million he pledged earlier this week to inject into the carrier to help prevent liquidation.
In a letter received by the Securities and Exchange Commission (SEC) yesterday, PAL said its board had 'authorised the chairman and CEO to effect whatever changes in management he may deem in the best interest of the company'.
This will be Mr Tan's second time at PAL's helm. Last year, creditors pressured him to step down as chief executive after they rejected a rehabilitation plan he had crafted.
PAL also announced the resignation of chief operating officer Jaime Bautista, who was replaced by Avelino Zapanta.
The decision to replace the carrier's top two managers was reached at a special board meeting on Monday. A source said Mr Virata and Mr Bautista had been asked to resign as part of Mr Tan's plan to revamp PAL.
The letter to the SEC also confirmed Mr Tan pledged to assemble 'a group to infuse additional fresh equity' into the ailing carrier.
Mr Tan 'offered to immediately deposit in escrow $100 million subject to certain conditions'.
It is thought the airline needs at least $200 million in the short term to stay in operation with creditors threatening to push for liquidation if the money is not raised by June 4.
Meanwhile, additional floating-rate note-holders and other unsecured creditors have emerged to reject PAL's latest rehabilitation plan.
Their objections centre on the 12-year loan repayment schedule and the proposals to waive interest payments.
Yesterday, the SEC was told Citibank - which holds $7.4 million in floating-rate notes and is asking for a 10-year repayment schedule - opposes a waiver of interest.
Japan's Dai-Ichi Kangyo Bank - whose floating-rate notes are due in January - also said that 'the final maturity of 12 years is unreasonably long', adding PAL's income projections only run to 2008-2009.
Chase Manhattan Bank, owed $9.8 million in short-term loans, had earlier asked the SEC to reject the plan.
PAL has more than $2.2 billion in debts, owes $184 million to floating-rate note-holders and $45 million in short-term loans.
