PAL walks back 'statement of hope'

In the mini-storm of news following Philippine Airlines' [PAL 6.05] long-overdue bankruptcy filing, PAL’s President, Gilbert Santa Maria, said that PAL would exit bankruptcy “before the end of the year”, and that the chance that the restructuring would fail is “very, very small”. The next day, PAL released a clarification, signed by its Corporate Secretary on behalf of PAL’s board, distancing PAL from Mr. Santa Maria’s comments.

The clarification referred to Mr. Santa Maria’s statement that PAL would be “out of Chapter 11 before this year ends”, and that it would survive and “fly long into the future” as a “statement of hope or wish”, and not based on any legal considerations. PAL said that there is “no certainty that the judicial proceeding will terminate quickly”, and that “at best”, Mr. Santa Maria’s statements were an “optimistic view” that “may not necessarily happen”.

MB BOTTOM-LINE

I wonder if Mr. Santa Maria even saw that bus coming. It’s interesting to see the Tan Family leave the most competent professional in the organization so out to dry on this clarification. Yes, Mr. Santa Maria’s comments did seem to be oddly confident for an airline that would have ceased operations next month had the ownership group not promised over a half-billion dollars in new debt and equity, but for anyone that’s ever drafted a response like this, the pains taken by PAL to distance itself from Mr. Santa Maria are both obvious and (to be honest) a little shocking.

At the same time, it is important for PAL to underline that its exit from bankruptcy protection has some external dependencies that make it problematic for management to give quotes that appear to make an early exit from bankruptcy protection seem “easy”.

Regardless of all Game of Thrones drama behind the scenes within the Tan family, what really matters to the retail investor is that PAL’s stock is still suspended, as it has been for almost three months. I’m not going to lie and say that I had been “suspended for failing to submit audited financials” on my PAL bingo card, but longtime readers will know that I’ve been pretty vocal about PAL’s board and its inability to take corrective action. All eyes on the Q3 earnings report! 

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