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President Rodrigo Duterte and Lucio Tan.
President Rodrigo Duterte and Lucio Tan.

PAL willing to compromise government debt

Philippine Airlines said Thursday it is open to a compromise agreement to settle unpaid navigational fees to the government.

“We look forward to meeting the negotiating panel and we are ready to submit a compromise agreement to settle the issue,” PAL said in a statement.

The Civil Aviation Authority of the Philippines (CAAP) sent letters to PAL in August 2016 to demand payment for unpaid navigational charges in the amount of P6.63 billion.

Transportation Secretary Arthur Tugade earlier threatened to file a law suit against PAL if the airline failed to settle its unpaid navigational fees.

He also said the government denied the request of PAL to pay its arrears in seven years.

“Thus, final demand for full payment of all unpaid charges has been sent to PAL, preparatory to the filing of appropriate legal action in order to protect the interest of government,” Tugade said.

President Rodrigo Duterte threatened to shut down the Ninoy Aquino International Airport Terminal 2, which is being used as PAL’s hub, if the airline would not pay its liabilities within 10 days.

PAL said the issue on alleged unpaid navigational charges was complex and the airline had been trying to thresh out the issue with the government for years.

“In fact, the same legal issues were the subject of a court case between PAL and the MIAA [Manila International Airport Authority] years back where the court ruled in favor of PAL,” the airline said.

PAL said despite the favorable court’s ruling, it opted to settle amicably with MIAA as a manifestation of its full support to the government.

“PAL earlier manifested its willingness to amicably settle with the CAAP as a manifestation of its continued support for the authority. For the past months, both CAAP and PAL have been working together to validate these claims in their mutual and collaborative effort to settle this obligation,” the airline said.

PAL said CAAP created an inter-agency panel of negotiators for the proposed settlement.

“PAL formally submitted its offer to CAAP which offer is more than the amount covered by the CAAP supporting invoices received by PAL,” PAL said.

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