State-run Philippine Amusement and Gaming Corp. said Tuesday Philippine Airlines is barred from building a new passenger terminal at the former Nayong Pilipino complex.
Pagcor said in a statement PAL’s contract with a former management of the state-run gaming corporation only included the use of the rented property as “an aircraft parking ramp/apron facility.”
“Hence, it is prohibited from using the leased premises for any other business or purpose [including the construction of a new terminal] without prior written consent from Pagcor,” it said.
PAL earlier said it submitted to the Transportation Department an unsolicited proposal to build a P20-billon passenger terminal beside its current hub at Ninoy Aquino International Airport Centennial Terminal 2 to expand its passenger capacity.
The proposed terminal would be designed to handle 12 million to 15 million passengers per year and would have aerobridges capable of serving 12 to 17 wide-bodied and single aisle jets.
PAL said it expected to start the construction of the new terminal by December 2020.
Pagcor said PAL was only paying a monthly rental fee of P40 per square meter for the 10 hectares of land at the former Nayong Pilipino complex. PAL’s contract will expire on July 11, 2033.
The property was sold by Philippine Reclamation Authority to Pagcor on May 12, 2009. Pagcor said the current management’s review of the lease contract with PAL discovered that the “lessor is not yet the absolute and registered owner of the property”
“Therefore, since Pagcor has no absolute authority to lease out the property, PAL does not acquire any right to the possession of enjoyment thereof, notwithstanding the contract of lease executed between the two parties,” it said.
“The previous board caused the acceptance of P21 million as downpayment form PAL but later issued an order to Pagcor’s Treasury Department not to accept the lease payment from PAL,” Pagcor said.
Pagcor said the lease price of P40 per square meter was “grossly disadvantageous to the government.”
“The ultimate aim of Pagcor’s current management is to ensure that all dealings entered into by the agency will be advantageous to the government,” it said.
“Pagcor has already requested an opinion recommendation from the Office of the Solicitor General regarding this matter,” Pagcor said.
Meanwhile, PAL was undergoing an equity restructuring ahead of the entry of a new strategic investor.
PAL Holdings Inc. said in a disclosure to the stock exchange the country’s flag carrier filed with Securities and Exchange Commission an application to reduce its authorized capital stock from P20 billion to P13 billion. PAL will also reduce its par value per share from P0.20 to P0.13 per share.
PAL Holdings, which controls both Philippine Airlines and PAL Express, earlier secured an approval from its board to reduce its authorized capital stock from P30 billion, divided into 30 billion common shares with a par value of P1 to P18 billion divided into 30 billion common shares with a par value of P0.60 per share, without returning any portion of the capital to stockholders.
PAL president and chief operating officer Jaime Bautista earlier said the airline was currently in talks with possible investors. “We’re hoping we can close the deal within the year,” he said.
The investor is expected to acquire up to 40 percent of the flag carrier. PAL tapped Morgan Stanley as financial advisor for the transaction.
PAL is taking delivery of seven brand new aircraft worth over $550 million, within the second half of the year as a part of its fleet expansion and modernization program.
The airline expects delivery of two Boeing 777-300 ER in December and five next-generation Bombardier Q400s in July to November.
The twin-engine A350-900 will become PAL’s new flagship aircraft.