Asia: The Airlines That Fell To Earth

Asia's carriers default on loans and slash payrolls

The sky was the limit when Philippine Airlines Inc. placed a $2.5 billion order for a fleet of new jets in 1995. PAL was ready to become a highflier in Asia's booming airline industry. But look at PAL today. Whipped by Asia's financial crisis, it lost $250 million in its most recent fiscal year and was forced to suspend payments on its $2.1 billion in debt. Angry pilots are on strike over layoffs. To survive, PAL has decided it must shrink drastically. It has just fired one-third of its 14,000 employees and plans to cut its fleet from 54 planes to 14. Says President Jose Antonio Garcia: "There's no way we could keep the airline the way it was."

To continue reading this article you must be a Bloomberg Professional Service Subscriber.