At least two-thirds of PAL shareholders voted at a special meeting to double the airline's authorised capital stock to 10 billion pesos from the current 5.0 billion pesos, clearing the way for a $4 billion re-fleeting programme, officials told reporters.
Shareholders have at least seven days and an extension of another seven days to subscribe to the capital increase, PAL director Estelito Mendoza told a news conference.
The earlier we can show to creditors we have a larger equity base the better, said Mendoza.
The new fleet will improve our on-time performance and safety, PAL chairman and chief executive officer Lucio Tan said in a separate statement.
We will be able to shed the `plane-always-late' image and gain acceptance from more passengers. With all these, we expect to bring the airline back to profitability. In the 1995-96 fiscal ending March 31, PAL reported a net loss of 2.18 billion pesos against a 1.72 billion peso loss the previous year.
PAL's huge re-fleeting programme involves the acquisition of 36 new aircraft by the year 2000.
Shareholders of the Tan-controlled PR Holdings Inc, the consortium which owns 67 per cent of PAL, earlier yesterday agreed to dissolve the holding company, allowing shareholders to own direct PAL shares.
Mendoza, as legal counsel of PR Holdings, has 60 days to propose the best way to effect the dissolution.
The Tan group said the capital increase of PAL would take effect before the dissolution of PR Holdings.
Minority shareholders of PAL, led by the Bank of the Philippine Islands (BPI), had opposed implementing the capital increase before PR Holdings was dissolved.
Mendoza said the BPI group was given the right to subscribe to the capital increase in PAL as if they owned direct PAL shares. He said he also planned to offer them a sweetener in the form of a swap deal in which the BPI group's PR Holdings shares could be exchanged for direct PAL shares.
If the BPI group decides to subscribe to the capital increase, it would get one board seat, Mendoza said.
The new distribution of PAL shares would place 56.66 per cent in the hands of the Tan group.
Government agencies, which have direct and indirect minority PAL holdings, have already agreed to waive their pre-emptive rights to subscribe to the new shares in favour of Tan.