ASEAN KEY DESTINATIONS
Philippine Airlines to exit receivership before end 2007
"After eight years under receivership, during which it established a solid track record of operational productivity and financial strength, we can now pronounce PAL fully recovered and ready to expand, "said Bautista on the sidelines of the airline's annual stockholders' meeting here.
"We are now in the process of obtaining the necessary approvals from the Securities and Exchange Commission for our exit from rehabilitation and a quasi-reorganization of the company, which we expect to materialize before the end of the year." PAL entered receivership in June 1998 after a series of external and internal crises led to massive financial losses, shut its operations and pushed it to the brink of liquidation.
But bold action by PAL chairman and CEO Lucio C. Tan, who single-handedly infused $200 million in fresh equity, saved the flag carrier and put it on the path to recovery.
In 2000, in just its first year under restructuring, PAL produced a modest profit of $1.2 million, a stunning turnaround from a $251.5 million loss the previous fiscal year. It has not looked back since, save for the extraordinary years of 2001 and 2003, when the September 11 terrorist attack and SARS crises hit aviation worldwide.
In a joint report to shareholders, Tan and Bautista said now was the appropriate time to advance out of the SEC-supervised rehabilitation program, citing PAL's improved financial condition and the favorable outlook for the airline sector.
"The difficulties that confronted us in the early days of our financial restructuring are clearly behind us. The airline's fortunes have been revived," Tan and Bautista declared.
In particular, they highlighted PAL's dramatic productivity gains over the past eight years-revenue per employee more than doubled, rising by about 10.5% yearly; asset turnover also more than doubled, and passenger load factor increased from 66.1% to 76.9% among others.
These enabled PAL to post operational profits for eight consecutive years, from 2000 to 2007, and net profits in six of those years, including a three-year stretch from 2005 to 2007 that culminated in a record profit of $140.3 million last fiscal year.
"Clearly, the revenue and earnings growth illustrate the ability to sustain momentum," Tan and Bautista said. "The airline and its culture have now been transformed into a platform for future growth." As a testament to the airline's achievements, PAL was cited in 2005 by the International Air Transport Association as the 6th most profitable airline in the world and the most profitable network carrier in Asia in terms of operating profit margin.
In 2006, PAL also received the merit award for "Turnaround Airline of the Year" from the Sydney-based Centre for Asia Pacific Aviation. PNA