PAL RECOVERS WHILE U.S. AIRLINES HURT

San Francisco, California, March 28, 2003 --  With the bilateral air talks
with the United States going ahead despite the initial stalemate in
Washington, the US-funded Freedom to Fly Coalition (FFC) and their people
in the Civil Aeronautics Board continue to push actively for "open skies"
that will give American carriers unrestricted frequency of airline flights
and seats and establish hubs on both sides of the Pacific while smaller
airlines like Philippine Airlines are prevented from doing the same, as
well as cabotage rights.

It is comforting to know that as the Manila government goes down to the
nitty-gritty of forging with Washington what PAL president Avelino L.
Zapanta calls "mutually beneficial air commerce treaty," the Senate has
uncovered a covert operation funded by the Accelerated Growth and
Investment Liberalization with Equity (Agile), through its Manila lobby
FFC, advocating a one-way street for the interests of American carriers.

One wonders why the Filipinos in the Freedom to Fly Coalition should
continue to push for open skies and the destruction of Asian airlines even
as there are doubts in the airline industry as to the capacity of the
American carriers to mount unlimited frequencies in the face of $18 billion
in losses annually and a combined 100 billion-dollar debt.

The world's airlines are being devastated, in the words of James C. May,
president and CEO of the Air Transport Association representing the U.S.
airline industry, by a doubling of fuel prices and lack of demand resulting
from war and terrorism threats.

"The U.S. airline industry is resilient and ultimately may survive a war,"
said May. "But without government help, survival will come at great cost to
its employees and to the U.S. economy as a whole."

U.S. government policy makers today are mired in debate on the rescue of
the hemorrhaging airlines struggling to stay airborne. More than 1,000
jetliners once flying the friendly skies have been pulled out of regular
service and sit idly in the cool thin air of the Arizona desert.

Still, the Asian Wall Street Journal reported, "analysts and airline
capacity cuts haven't been enough."

Crisis or no, the Freedom to Fly Coalition in Manila has to justify the
P7.5 million annual fee which FFC president Mila Abad told the senators her
lobby group gets for pushing open skies and removing barriers for U.S.
businesses in air and port works.

So what's holding up the Philippine request for a level playing leading to
a just and reciprocal accord in the stalemated U.S.-Philippines Air
Transport Agreement?

Another key question: Why can't the Manila government support its own
domestic carriers instead of stifling their growth?

While the war with Iraq is deepening the U.S. airline crisis, Northwest
Airlines which flies to Manila, has just announced it would reduce its
schedule by 12 percent and cut its work force by 11 percent or 4,900
employees. At the same time it seeks more wage cuts and concessions from
its various unions.

United Airlines, which sometime ago stopped its U.S.-Manila flights because
of poor business aggravated by unrestricted poaching of trans-Pacific
passengers, especially Filipino "balikbayans" and overseas contract
workers, by Taiwanese and Korean carriers, is cutting down capacity by 8
percent on top of its flight cutbacks earlier this year. Some 2,300 flight
attendants and 1,100 mechanics are on unpaid leave.

American Airlines is trying to ward off a Chapter 11 (bankruptcy) filing
and is now in the process of cutting airplane-lease rates. At the same
time, it is in the midst of negotiations with its unions to cut labor costs.

Hawaiian Airlines has filed for Chapter 11 protection.

In Manila , while the aviation fuel situation is nearing the critical point
and could force Philippine carriers to increase their rates, cost-cutting
measures instituted by PAL chairman Lucio C. Tan and president Avelino L.
Zapanta have enabled Philippine Airlines to post a P200 million net income
for fiscal year 2002 ending Monday (March 31). Quite an achievement,
considering that most airlines are doing very badly.

Zapanta said that improved passenger traffic reversed the airline's dismal
performance in 2001 when ticket sales dropped after the Sept. 11 terrorist
attacks in the U.S.

Tan was able to trim PAL's debts from $2.2 billion before its
rehabilitation under the aegis of the Securities and Exchange Commission to
a manageable $1.2 billion.

"We are very confident about the future of PAL," Zapanta said. "For the
last four years, we have been profitable in those years including the
fourth year. We are (also) able to pay our creditors on time." These are
things that the American mega-carriers cannot boast of at the moment.

Tuesday, PAL mounted three flights to the U.S: Los Angeles, San Francisco
and Vancouver, Canada. Would you believe that for the last three weeks it
had been very difficult to book a seat on any of these flights? The Iraqi
war notwithstanding, the peak travel season is upon us. (By PRUDENCIO R.
EUROPA, Malaya)


Reported by: Sol Jose Vanzi

© Copyright, 2003  by PHILIPPINE HEADLINE NEWS ONLINE
All rights reserved


PHILIPPINE HEADLINE NEWS ONLINE [PHNO] WEBSITE