PAL seeks $150-million loan to finance capex

MANILA, Philippines - Philippine Airlines is working on a $150-million loan from a local bank to finance capital expenditure.

“We are trying to get a line in the neighborhood of around $150 million and we’ll draw it in tranches of $50 million,” PAL chief finance officer Jose Olives said.

He said plans to secure a loan from government banks did not push through.”They didn’t seem to have the appetite for it so we talked to private local banks,” Olives added.

According to him, once the loan is finalized, $50 million will be drawn by the middle of this year and the rest will be drawn as the carrier needs it.

Olives said PAL’s annual capital spend is at least $50 million and this year, the carrier will also need to raise funds for pre-delivery payment for its Boeing plane set for delivery next year.

As of March, PAL’s total liabilities amounted to $1 billion.

Total debt payments of the carrier amounted to more than $160 million composed of $10 million monthly amortization and its major debt payment of more than $40 in June. Olives said these debt payments were settled through internal cash flows.

This fiscal year, PAL’s last major debt payment is around $30 million set to be settled in June plus the $10-million monthly amortization of the carrier.

PAL’s revenue target for the entire fiscal year is $1.6 billion, up from $1.36 billion the previous year. Growth, Olives said, will be driven by higher traffic in both its international and domestic operations.

For the fourth quarter alone, the airline expects small profits brought by the 10 percent to 15 percent growth in volume experienced in January and February.

PAL reported a modest profit of $15.1 million in the third quarter (October to December 2010) of its current 2010-2011 financial year - a period when air travel gingerly recovered from a slump the previous year.