From: an3892@anon.penet.fi
Subject: PAL Fight Threatens Boeing, Airbus Deals
Organization: Anonymous contact service
X-Anonymously-To: soc.culture.filipino
Date: Tue, 26 Jan 1993 04:53:11 GMT

        MANILA, Philippines (UPI) -- A businessman fighting to take over the
Philippines' flagship airline has called for the re-evaluation of orders
by the company's current management for $1.12 billion for new jets, a
letter disclosed Monday.
        The request, contained in a letter to Philippine Airlines chairman
Antonio Cojuangco, could threaten orders for six Airbus A-340 and four
Boeing Co. 747 jetliners.
        The Airbus deal is worth an estimated $561 million and the Boeing
deal about $560 million. Pal has already paid $75 million to Airbus and
$20 million to Boeing.
        ``The acquisition of the aforementioned aircraft may have severe and
adverse consequences on the viability of the overall operations of PAL,''
the letter said. ``I would request, therefore, that, meanwhile, further
implementation of the acquisition be deferred and the matter be
submitted to the present board of directors for re-evaluation.''
        The letter, dated Jan. 22, was submitted by Juan Luis Virata, a PAL
board member allied with tobacco tycoon Lucio Tan who is battling
Cojuangco for ownership of the recently-privatized airline.
        In the letter, obtained by UPI, Virata requested copies of documents
concerning the sale of the jets to PAL, including financing arrangements
and minutes of meetings of the company's board of directors during which
the sales were discussed.
        The airline's board of directors met for three hours on the issue
Monday and agreed to provide the requested information.
        ``The board noted all the contents of the letter and the board agreed
to come up with an amicable solution to the points presented,'' Jose Te
Ibazata, a member of the PAL operations committee, said.
        He would not elaborate on the purchase plans or on the ongoing
ownership struggle but said the board meeting was ``amicable and
cordial.''
        A group of 18 Philippine banks that agreed last year to lend PAL $122
million to help pay for the new 10 jets suspended payment of the last
$47 million earlier this month until the ownership dispute was settled.
        ``Since the banks have frozen the loans, Tan can stop the orders,''
said Joven Babaan, an analyst with Baring Securities.
        The fight between Tan, a former ally of former President Ferdinand
Marcos, and Cojuangco, head of a major telecommunications firm,
threatens the future of PAL and could damage investment sentiment in the
Philippines.
        Cojuangco headed a consortium that bought 67 percent of PAL from the
government last year for $368.7 million. He secretly sold 40 percent of
the consortium, PR Holdings, to Tan.
        The two later fell out, apparently because Tan disagreed with
Cojuangco's ambitious expansion plans.
        The issue became public only recently, when Tan launched a campaign
to wrest control of PAL from Cojuangco.
        President Fidel Ramos met with both men last week and urged them to
settle the issue quickly without damaging the reputation of PAL.
        He said the government, which remains the largest PAL shareholder,
did not want to choose sides in the battle but warned he would not
tolerate a fight for the airline that would ``negate the attractiveness
of the Philippines as an investment, trade and tourism destination.''
        Tan's emergence as a major PAL stock holder could shake investor
confidence in the Philippines because it is seen by some as a sign that
other major industries could slip back under the control of insiders who
ran the country under Marcos.
        It is also an embarrassment for the government's privatization
program, which was supposed to have ample provisions to freeze out
former associates of Marcos.
        The former president was chased from power in 1986 after allegedly
looting billions of dollars from the country. He died in exile in 1989.

-------------------------------------------------------------------------
To find out more about the anon service, send mail to help@anon.penet.fi.
Due to the double-blind system, any replies to this message will be anonymized,
and an anonymous id will be allocated automatically. You have been warned.
Newsgroups: soc.culture.filipino