Airlines likely to bring in new partners amid financial distress

CEBU, Philippines —  The country’s three leading carriers – Philippine Airlines, Cebu Pacific and AirAsia Philippines – may possibly have to bring in new investors to help them overcome extreme financial difficulties due to the COVID-19 pandemic, Deputy Speaker and Surigao del Sur Rep. Johnny Pimentel said on Sunday.

“Our sense is, the best way for government to help our airlines is to create all the conditions and put in place all the precautions needed to hopefully allow them to slowly resume flight operations, at least domestically,” Pimentel said.

“Clearly, the longer their planes stay on the ground, the more money they lose,” Pimentel said.

Regular domestic and international flights have been grounded since mid-March in a bid to contain the spread of COVID-19.

Meanwhile, Pimentel said industry players may have to obtain bridge loans from banks, float commercial papers, and/or seek additional equity financing to improve their liquidity and help them ride out the crisis.

“There is ample liquidity out there because of the Bangko Sentral ng Pilipinas’ series of interest rate cuts since February,” Pimentel said.

“Otherwise, they have the option to issue and sell new preferred or common shares of stock to new investors, as long as there is no change in control of the airline,” Pimentel said.

“In the event that there will be a change in control, then they will have to seek our approval (of the transfer of ownership),” Pimentel said.

Under the terms of their legislative franchises, airlines must secure the prior approval of Congress once there is a change in controlling interest, Pimentel pointed out.

Pimentel stressed the need for government to help airlines pull through as soon as possible.

“We are in fact counting on the eventual revival of air travel to help drive the country’s economic and jobs recovery,” Pimentel said.

Pimentel said he supports the industry’s plea for temporary relief from navigational and airport charges.