PAL Airlines (Santiago de Chile) has announced the indefinite suspension of its operations to allow it time to resolve what management has termed "a complex financial quagmire." Airline CEO Fernando Musiet told Chile's Diario Financiero that despite the airline board's decision to begin liquidating assets, the carrier would not file for bankruptcy.
"We will suspend operations until we see that there is a chance that we can return to profitability, which will be discussed in due course," he said.
Airline executives added that PAL will likely strip itself of all unnecessary business assets leaving only its MRO, spare part supply, and catering division. Its fleet of aircraft including two B737-200Advs and two B737-300s may also be returned to their lessors.
Musiet attributed the company's financial woes to unfavorable market conditions chief among them a slowdown in the carrier's bread-and-butter market, the mining sector. In addition, the CEO also bemoaned the weakening Chilean Peso which, he said, had driven up fuel costs.
In mid-August, the Chilean civil aviation authority (Dirección General de Aeronáutica Civil - DGAC) grounded the carrier over unremitted passenger embarkation taxes as well as aeronautical charges said to amount to over CLP160million (USD271'000).
Management says it has already met with creditors adding that an "understanding" has been reached with each of them concerning the carrier's current situation and future plans.
