Tan putting PAL on auction block

He's mad as hell and he's not going to take it anymore.

Philippine Airlines (PAL) chairman Lucio Tan is reportedly looking for buyers for the airline, disgusted by what he said were unfair criticisms against him.

A close confidant of the taipan said yesterday that Tan was apparently hurting from "baseless comments" he had been getting from various quarters, including government officials, for owning PAL.

What these critics did not consider, the source said, was that Tan had long wanted out of PAL but was prevailed upon by President Estrada to save the airline and, with it, the economy.

Tan infused additional capital to the flag carrier, making PAL viable and financially attractive again, the source added.

"As a businessman, who prefers to be low-key and apolitical, he wants out of the glare of undeserved notoriety. Even if PAL is already becoming profitable, with the brickbats he is getting, it is not worth holding on to the once debt-ridden company," the source, who requested anonymity, said.

Among the criticisms being leveled at Tan, a known contributor to the campaign of President Estrada in the 1998 elections, is the alleged preferential treatment for the airline -- from having a virtually exclusive terminal in the Ninoy Aquino International Airport Centennial Terminal II, to being at party to the Philippine-Taiwan air controversy on the so-called poaching of passengers.

His flagship company, Fortune Tobacco, has also been embroiled in an on-again, off-again tax evasion case.

The source said that Tan was willing to sell PAL for only $700 million, a small amount compared to the huge investment he has already poured into the airline.

"Mr. Tan is willing to sell PAL even for $700 million. It does not matter to him if the buyer is China Airlines, Singapore International Airlines, or anybody," he said.

The plan to sell PAL comes at a time when the airline has exceeded expectations on its rehabilitation plan by registering better-than-expected financial results.

PAL president Avelino Zapanta, in an earlier interview, attributed PAL's improved performance to the "new culture of better management-labor cooperation."

He said PAL has registered a 91 percent departure and arrival reliability, considered the highest in the Asia-Pacific region . The industry standard is 85 percent, making PAL one of the more efficient airlines.

This was made possible, according to him, by PAL's relatively new fleet, whose average age is between two and three years, considered the youngest in Asia.

PAL used to own a fleet of 55 aircraft. But a downsizing undertaken after it temporarily shut down in 1998 following a crippling pilots' strike, allowed it to phase out a lot of aging, obsolete and operationally inefficient aircraft.

Among those retired were many Fokker 50 turboprops, which seated only 56 passengers and lost money even when fully booked.

The present fleet of 29 aircraft is composed of new and state-of-the-art Boeing and Airbus planes, such as the widebody A340s, A330s and B747-400s, which boast of advanced automation, ultra long-haul range, higher seating capacity, and the latest cabin amenities and passenger comforts.

Zapanta said PAL's load factor in March this year was registered at 72 percent, a dramatic improvement for the airline.

Tan had earlier expressed confidence the flag carrier would advance out of a rehabilitation plan in five years, or half the time originally projected by its receiver and creditors.

Zapanta pointed out the airline exceeded expectations when it defied the projected losses under the rehab plan.

"According to the people that approved the plan, PAL would be incurring a net loss of P640 million for fiscal year 1999-2000. Luckily, at the worst scenario, PAL will lose a little more than P100 million," he said.

He stressed that had it not been for the sharp rise in jet fuel prices since the start of the fiscal year, PAL would have made a P500- million profit.

In December 1999, PAL posted net earnings of P240.4 million, overshooting by 30 percent its goal of P182 million for the month, while January net earnings hit P98.3 million, again surpassing its target for the period.

Just last month, PAL resumed direct flights between Cebu and Hong Kong and will fly back to Australia starting June this year as that country gears up for the summer Olympics.

The airline also plans to expand its trans-Pacific flights, resuming direct flights to Vancouver and increasing flights between Manila-Los Angeles and Manila-San Francisco.

It will also resume direct flights to Saipan and Guam and operate to Europe, starting with direct flights to Frankfurt, Germany.

PAL currently holds the rights to expand services to the US, including the right to operate about 15 more weekly flights to its choice of US cities.