PAL Shake-up: The saga continues

Manila’s blue skies are empty and the control towers are quiet. But over at Lucio “Kapitan” Tan’s Philippine Airlines (PAL), the turbulence shows.

On Friday, Kapitan’s son Michael and daughter Vivienne (who are half-siblings), stepped down as members of the powerful board of directors of PAL.

Both agreed to leave the board to allow more professionals in the beleaguered flag carrier. Supposedly, this was what economic officials wanted before PAL could get some government support in this difficult time.

But that’s only half the story, multiple sources told me. I heard the siblings left the airline with heavy hearts.

Vivienne, sources say, really wanted to address PAL’s financial bleeding and plug the money leaks. In the process, she may have ruffled some feathers. And thus, some people may have wanted her out of the company.  Now she is no longer part of the board and management, sources say. But she will get a board seat in the smaller airline, Air Philippines.

During their last virtual board meeting on Thursday, Vivienne was quiet, says a source who was present during the meeting.

Michael, on the other hand, gave a farewell speech, the source says.

“He thanked PAL for the opportunity to serve, but he was sorry to leave PAL at a time of crisis,” the source adds.

Russia’s Rasputin

But as in the case of Vivienne, some people may have wanted Michael out of the company, too, sources say.

For instance, sources say, he was recently accused of disloyalty by – as the sources described – a Rasputin-like figure in the Tan empire.

Supposedly, so goes this Rasputin’s story, Michael disagreed with the transfer of PAL’s operations to Terminal III in the mid-2000, paving the way for the competitor to move into the terminal and grow.

But sources say it was not Michael, but Kapitan’s brothers (including the other MT - Mariano Tanenglian) who did not want PAL to transfer to Terminal III because the move entailed higher costs.

During the meeting on Thursday, Michael thanked his father for the chance to serve PAL in the last 15 years, says the source who was in that meeting.

The siblings, their representatives told me, declined to comment on the circumstances surrounding their departure.

Outside PAL, Michael is president of LT Group Inc. and Vivienne remains as director of various LT-owned companies.

What would Bong Tan do?

I wonder how different the situation would be if another Tan son, Lucio “Bong” Tan Jr. were still alive. A team player and a one-man-axis of power, Bong tried to keep the “peace” in the empire, always considering what’s good for the business and the employees.

He shared his father’s immense love for PAL, I sensed this during one of our last conversations. He and Michael had wanted to sell some of their father’s pricey real estate assets in China just to save the airline when it was already encountering financial trouble.

Japan’s All Nippon Airways

I wonder, too, how ANA is appreciating all that’s happening with the flag carrier. It acquired a 9.5 percent stake in PAL last year, enough to get a board seat.

“ANA is watching a telenovela,” says another source.

That’s an apt way of putting it, I guess – a boardroom telenovela unfolding before their eyes. No Nihongo subtitles needed.

I do hope PAL can ride through the turbulence and that with the boardroom changes, it would finally get help from the government.

While the government cannot afford to bail out the beleaguered carrier, some form of debt relief or liquidity assistance may be provided, tied to strict conditions. All stakeholders, including its owners, must share in the burden. And yes, the company must be professionalized.

But for sure, PAL needs help. And fast. At the end of the day, it is a private company heavily imbued with public interest.

In the time of COVID-19, for instance, even as it was bleeding, the flag carrier fetched thousands of stranded Filipinos all over the world and brought them home. It has likewise sent thousands of foreigners in the Philippines back to wherever their homes may be -- US, New Zealand, Canada and Australia.

Like frontliners, its crew members brave the risks to serve their fellow Filipinos and foreigners alike.

Asia’s oldest airline

PAL is Asia’s oldest airline, even older than our government.

Born before World War II, the airline was formed by a group of industrialists led by Andres Soriano Sr. but then war broke and interrupted PAL’s takeoff as Asia’s first airline.

Today, nearly 80 years later, PAL is facing another war, the COVID-19 pandemic, which it considers its biggest challenge since World War II.

Sought for comment, PAL spokesperson Cielo Villaluna says:

“Philippine Airlines’s survival is the goal. Our stakeholders share the same goal. Internal cost control measures are being carried out. But government support is crucial – be it in the form of  long term credit facility, working capital credit lines, credit guarantee arrangements, and relief from airport charges.”

These, she adds, will help the flag carrier weather this turbulent period.

If the government decides to help, it really isn’t about bailing out a billionaire’s company; it is about helping an institution that has been serving Filipinos since its birth.

And this may be easier now that the edge-of-your seat boardroom drama is over. Well, at least for now and until the next Netflix-like Game of Tans season starts.

Iris Gonzales’ email address is [email protected]. Follow her on Twitter @eyesgonzales. Column archives at eyesgonzales.com