Lufthansa to buy PAL assets

Lufthansa to buy PAL assets

MANILA (Reuters): Debt-ridden Philippine Airlines has signed a letter of intent with a unit of Germany's Lufthansa to sell its maintenance and engineering operations, company president Avelino Zapanta said on Tuesday.

Zapanta told Reuters the letter was signed last weekend, but talks were still continuing on details.

The two sides were also discussing a possible management contract under which a Lufthansa unit would take over day-to-day operations of the airline, he said.

"We are still discussing management and there is no letter of intent on that yet," he said.

PAL, which has some $2.2 billion in debt and is in the midst of a rehabilitation program, is currently managed by a team of advisers formerly employed by Cathay Pacific Airways and its parent Swire Pacific.

Zapanta said the team was still under contract to PAL but that could change.