Philippine Airlines, Inc. (PAL) has been the dominant air carrier in the Philippines since its creation in 1941. Operating both internationally and within the 7,100 islands that make up the country, PAL has been something of a curiosity and scandal among the world's major airlines, for decades losing money while being traded among the handful of wealthy families in control of the Philippine economy. After 14 years of ownership by the government of deposed President Ferdinand E. Marcos, PAL was sold at the order of President Corazon Aquino in 1992 to a consortium of companies under the leadership of the Soriano and Cojuangco (pronounced "koe-HWAHNG-koe") families. Because Aquino's maiden name was Cojuangco, many believed this "privatization" of PAL was not likely to break the pattern of corruption and inefficiency that has marred the carrier's history since 1941. But events in the late 1990s would conspire to force significant changes in the airline. Founding in the 1940s
The first Philippine air transport companies were created in the early 1930s, primarily as a means of travel and freight delivery between the nation's scattered islands. One of these pioneering companies was the Philippine Aerial Taxi Company (PATCO), which was granted a 25-year charter by the Philippine legislature in 1931 for both domestic and international flights. At that early date, when the country was still a possession of the United States, Pan American Airways provided most of the Philippines' international air transportation. PATCO settled for short flights among the major islands of Luzon, Cebu, Leyte, and Mindanao. On the less developed islands, PATCO also provided intra-island flights between distant towns. The 1941 transformation of PATCO into PAL involved an international cast of characters, most notably General Douglas D. MacArthur, at that time in charge of the United States Armed Forces in the Philippines preparing for an expected Japanese invasion of the islands. General MacArthur, whose father had served as the first military governor of the Philippine Islands following the Spanish-American War of 1898, had served in the country in various capacities throughout his career, including a four-year period before World War II when he was employed by the Philippine government as its field marshal. (MacArthur was recommissioned by the U.S. Army in 1941 and oversaw the eventual loss of the Philippines to the Japanese in 1942.) The general employed as his aide-de-camp a wealthy Spaniard named Andres Soriano, who had previously served as consul in Manila for the Spanish dictator Francisco Franco. Soriano controlled the large San Miguel Breweries along with a number of other corporations, and had powerful connections in the Philippine capital. In 1941 he put those connections to good use by teaming with the National Development Company, a government agency, in forming Philippine Airlines, Inc., which promptly absorbed PATCO, thereby becoming the nation's largest air carrier. As the creation of General MacArthur's aide de camp, PAL stood an excellent chance of winning contracts from the United States Armed Forces for its transport needs in the coming war. Unfortunately for Andres Soriano and his fellow investors, the invasion came early and ended quickly, with the Japanese gaining control over the islands by the summer of 1942. It is not clear what became of PAL during the Japanese occupation, but on December 8, 1941, the day after the Japanese attack on Pearl Harbor, General MacArthur made Andres Soriano a colonel in the U.S. Army, and an American citizen as well. It is safe to assume that Soriano returned to Manila with MacArthur's liberating forces in 1944 and resumed control of his various business interests, including PAL. There is considerable evidence that MacArthur helped Soriano and PAL whenever he could. In 1946, MacArthur instructed the War Department to fly 20 tons of bottle caps to Soriano's San Miguel Brewery to cover a shortage. In...
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