Philippine Airlines Will Be Taken Private Next Year

The Philippines plans to privatize flag-carrier Philippine Airlines next year, officials said over the weekend.

A company spokesman said the government wants to sell up to 35% of the carrier to a foreign airline and 45% to employees and the public. That would leave the government with a 20% holding.

The airline is now about 99% government-owned.

PAL is among 300 government properties that President Corazon Aquino targeted for privatization under an ambitious program launched in 1987.

PAL Chairman Feliciano Belmonte said the foreign investor would be limited to a 35% interest so PAL could maintain its status as the official flag carrier.

The carrier’s spokesman declined to say what foreign airlines PAL would negotiate with.

Belmonte said the company is raising funds to buy back foreign debt of $650 million as the first step toward privatization.

This will be followed by the sale of equity to a foreign carrier. The final step will be sale of equity to employees and the public through the stock exchanges.

Under the plan, Belmonte said, 51% of the airline will be sold by the middle of 1991.

Officials announced the privatization plan at the company’s annual meeting Friday.

To cope with increasing passenger demand and to make itself attractive to buyers, PAL began an expansion and modernization plan last year.

Officials said the company now has 14 wide-body aircraft--seven Boeing 747s, two DC10-30s and five A300-B4s.

Two more 747s will be added by February of next year.

The company posted a profit of $22.4 million in the fiscal year ending in March, 1990, the highest in its 50-year history. That was 90% more than the previous year’s $11.7 million.

Balancing the good news about profit are alleged corruption problems at the carrier. Two top PAL executives were suspended this summer while the company investigates alleged fraud amounting to about $77 million.