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Strategies & Market Trends : Asia Forum -- Ignore unavailable to you. Want to Upgrade?

To: Paul Berliner who wrote (6586)	9/22/1998 9:29:00 PM
From: Dayuhan	Respond to of 9980

Paul, The PAL situation is complicated. The airline was privatized several years back, and the majority stake (70%) was picked up by Lucio Tan, an extremely wealthy man with a somewhat sinister reputation. He immediately embarked on a refleeting program that was widely criticized as overambitious. It soon emerged (on the gossip circuit, at least) that many of the leases were coursed through intermediary companies owned by Tan, and that the terms of the leases were less than advantageous to PAL. Most servicing functions were also taken over by Tan-owned companies, also at non-competitive prices. In short, he pretty well bled it to death. Now there is a huge question of what to do with it, short of a bailout that the government can't afford. Inevitably it will end up in courts, which is not promising. The Gov't has been trying to nail Tan on tax chages for years; he's slippery, and can afford much better lawyers than the Gov't. In the meantime, no flights. We can live without the international service, which others will cover, but the domestic service will cause huge trouble. Presumably the leases are still being paid as the aircraft sit on the ground. The delights of Asian business... When the worm turns, Cathay will be worth a good hard look, as will SIA. Steve