FINANCE Secretary Carlos G. Dominguez III wants flag carrier Philippine Airlines (PAL) and its PAL Express unit to settle their outstanding obligations to the Civil Aviation Authority of the Philippines (CAAP), which has so far amounted to P570 million as of end-August.
Dominguez, who sits as a member of the CAAP Board of directors, told reporters he had asked Transportation Secretary and CAAP Board Chairman Arthur P. Tugade “to intensify collection efforts.”
Citing data from Tugade, Dominguez said PAL’s outstanding obligation to CAAP as of end-August this year is P373 million while PAL Express owes another P197 million.
The finance chief said the government may still collect the landing fees from PAL even during the implementation of its rehabilitation plan.
Under Section 19 of the Financial Rehabilitation and Insolvency Act (FRIA) of 2010, the imposition of taxes and fees, including penalties, interests and charges due to the national government or to local government units shall be considered waived upon issuance of the Commencement Order by the court and until the approval of the rehabilitation plan or dismissal of the petition, whichever is earlier.
“This provision does not apply to landing fees as these are not collected by the national government but by the CAAP or MIAA [Manila International Airport Authority],” said Dominguez, who was also a former Chief Executive Officer of PAL.
“Also, it can be considered that landing fees are ordinary and regular expenses hence may be collectible even during the implementation of the rehabilitation plan,” he added.
On Friday, PAL announced that it secured clearance from the US Bankruptcy Court for the Southern District of New York to tap an initial $20 million from $505-million debtor-in-possession financing for it to continue operating.
PAL recently filed for Chapter 11 bankruptcy protection in New York as it works out a “consensual” restructuring plan with creditors, suppliers and shareholders. PAL is the only party included in the Chapter 11 filing; while PAL Holdings Inc., which is listed on the Philippine Stock Exchange (PSE: PHI), and Air Philippines Corp., known as PAL Express, are not included in the Chapter 11 filing.
As relayed by Tugade to Dominguez, PAL and PAL Express “committed to make current all their obligations to CAAP, incurred from July 2021 onwards.”
Tugade said that obligations prior to July this year shall be subject to reconciliation and immediate payment, the terms of which to be agreed between the CAAP and PAL. It is also still subject to final Board approval.
The Civil Aviation Authority Act of 2008 grants CAAP fiscal autonomy. All monies the regulator earns from the collection or levy of any and all such fees, charges, dues, assessments and fines it is empowered to collect / levy under the Act shall be used solely to fund the operations of the Authority.