COA Questions Economic Viability of PADC

25 Juni 2019

Activities in Philippine Aerospace Development Corporation (PADC) (photo : PADC)

Facing management issues, the Philippine Aerospace Development Corporation’s “economic viability” to exist as a state-run corporation is under serious scrutiny.

The Commission on Audit, in its 2018 PADC annual audit report, said the PADC is no longer performing “its core mandate”, noting that it has incurred financial operational losses reaching P177.9 million from 2013 to 2018.

In the recently released report, COA called for a “comprehensive review” of PADC’s structure, policies, financial capability, and business market” as state auditors aired strong doubts about its sustainability and economic viability to continue operating.

COA said that in determining the viability and necessity of allowing PADC to exist, its management must assess the current condition of the aviation industry, the PADC’s existing facilities, and technical capability, its financial position, and competitiveness with private suppliers and representatives of foreign suppliers and distributors.

There have been three top management changes since 2018 after retired Commodore Gilbert Rueras, the ten president and chief executive officer, was suspended.

Rueras was replaced by Transportation Undersecretary Manuel Antonio Tamayo who was replaced when President Duterte appointed lawyer Steve Victor Siclot as the new president and CEO.

Created in 1973, the PADC is tasked to advance available related transport services in the country. Among its other goals are to offer reliable technical repair and maintenance support system and develop an aircraft assembly and manufacturing industry.

COA gathered that the PADC was able to perform its core mandate in the ’80s and ’90s but business waned in the late ’90s as the firm absorbed operational losses, especially from 2013 to 2017.

Audit examiners revealed that in 2018, sales reached a meager P5.91 million but the cost of sales and operating expenses reached P34.207 for the year, thus resulting in operating losses aggregating P28.28 million.

IN 2018, the only revenue sources of the PADC were the AMA Properties and Management and the Philippine Navy for the sale of aircraft parts and cost of repair of a PN Islander plane, respectively.

Financial records further disclosed that PADC’s existence is being sustained primarily by the P43.448 million rental payment for three hangars leased by Cebu Pacific and eight other companies.

COA said other contributory factors to the losses are the absence of tax clearance due to the cases filed by the Bureau of Internal Revenue against PADC, the expired accreditation to conduct repair and the lack of landline telecommunications connection and internet service.

“With these in view, it is clear that PADC is no longer performing and carrying out its principal/core mandate,” the state audit agency said.

“It is also worth mentioning that the Manila Bulletin in its January 4, 2018 issue, reported that the abolition of PADC was already raised in one of the meetings of the Governance Commission for GOCC’s (GCG) but one of its directors opposed the proposal and instead recommended for its revitalization,” COA disclosed.

(Manila Bulletin)