PAL uses Rappler case against Malaysia’s control of Philippines Air Asia
The controversial SEC decision about the unconstitutional foreign control on Rappler news operations has found an unlikely advocate – Philippine Airlines.
According to the grapevine, the flag carrier has cited the position of the Securities and Exchange Commission on Rappler to press the Civil Aeronautics Board to rescind the operating permit of Philippines Air Asia, the low-cost carrier that is on continuing lifeline support from the Air Asia Group of Malaysia. PAL and, its competitor, Cebu Pacific, joined forces last year to oppose the renewal of the certificate of public convenience and necessity of the local Air Asia, citing the Malaysian airline’s own disclosure at the Kuala Lumpur stock exchange that it was treating investee companies like the Philippine carrier as a “subsidiary” even though on record the Malaysian company only owns up to the 40 percent equity limit imposed by the Philippine constitution. But the CAB, chaired by Transportation Secretary Arthur Tugade, voted to renew Air Asia’s permit, without advising PAL and Cebu Pacific to file a separate complaint specifically on the issue of foreign control.
For still unclear reasons, Cebu Pacific decided not to pursue the case, letting the Lucio Tan airline to press the constitutional issue by itself.
Like Rappler, Philippines Air Asia has been capital deficient for years and has had to rely on foreign funding to support its day-to-day operations.
The Air Asia Group, by its own accounting, said the Philippine unit was in “negative equity position,” forcing the Malaysian parent to reclassify the Malaysian ringgit 1.81 billion (about P23.7 billion) advances it had extended to the Philippine carrier as of 2016 as “perpetual capital securities.”
But unlike Rappler, the local Air Asia unit does not hide the fact that it is operating just like a subsidiary, from the hiring of the CEO down to the choice of airplanes and routes and operating the website.
“These associate companies (in Thailand, Indonesia, and the Philippines) are strategic investments of the company and form an essential part of the company’s growth strategy,” the Air Asia Group said. “They provide access to a wider geographical market and network coverage in the provision of air transport services across the ASEAN region.”
Still, like Rappler, the Air Asia Group committed a slip when the airline holding company reported to the Malaysian authorities that:
“Effective from Jan. 1, 2017 …. the respective investees have undertaken to comply at all times with the recommendations made by the company under the BLA (business licensing agreement). Pursuant to this, the company is additionally able to demonstrate power, as defined in MFRS (Malaysian Financial Reporting Standard) 10, over these investees and has, accordingly, accounted for these investees as subsidiaries.”
Among its defenses, the local Air Asia unit told the CAB that it has no jurisdiction to review and interpret foreign documents such as those filed by the Air Asia Group in Malaysia.
Air Asia also said the “49 percent” ownership that it had listed for the Philippine unit, similar to the equity stakes it has with the Indonesian, Japanese, and Indian carriers, was a typographical error. Money talks
• San Miguel Pure Foods has managed to stop the application of the famous Magnolia Bakery of New York to trademark its name in the Philippines on the ground that the San Miguel Group owns the local Magnolia mark.
• The faded Subic Bay Yacht Club may just see some stirrings in its corporate front with the acquisition of a qualifying share by Davao-based billionaire Dennis Uy.
Correction: The daughter of Bancom founder Sixto Roxas, Maria Teresa “Ming” Roxas, is very much alive, contrary to a report here last Monday.
The Roxas daughter has been working at The Beacon Academy in Biñan, Laguna, where she is the dean of students.
It was actually the late nephew of Sixto Roxas, Araneta Group CFO Victor Kalaw, who passed away childless, and whose estate the Bancom founder now administers. Our apologies for the mix-up. E-mail: moneygoround.manila@yahoo.com