GOCC running Clark airport in the red
CLARK FREEPORT—The state-owned corporation running the Diosdado Macapagal International Airport (DMIA) here has incurred an P831.9-million deficit despite capital infusions of P2.465 billion from two bases conversion agencies, audit findings showed.
A Commission on Audit report cited “limited capital and continuous losses in its operations” as the reasons the Clark International Airport Corp. (CIAC) accumulated the deficit from 2003 to 2010.
“Likewise, the huge cash overdraft was evident in the insufficiency of the cash and cash equivalents balance of P30.28 million to cover the security deposits and advance rentals … in the total amount of P264.7 million as of yearend, thereby posing serious concern to the corporation’s viability as a going concern,” the COA report said.
A CIAC official said the audit report came up when a CIAC board member, during a Nov. 4 board meeting, inquired on the status of security deposits.
The COA report said the CIAC works on a limited capital because its authorized capital stock was only P20 million when it was created by Executive Order No. 192 in 1994 to manage the Clark Civil Aviation Complex, the base of the DMIA.
It said this was why the advances of CIAC from the Clark Development Corp. (P2.428 billion) and Bases Conversion and Development Authority (P37.074 million), given when the CIAC was a subsidiary of the two agencies, could not be converted into equity.
“The corporation’s business income has not been sufficient to cover its expenditures,” the COA said, adding that personal services accounted for 61 percent of the income.
It advised that security deposits, guaranty deposits and performance bonds “partake of the nature of trust liabilities, which should not be utilized.”
In a statement, the CIAC financial department confirmed the losses, saying these were due to huge capital outlays or investments since 1995.
“The [CIAC] incurred operating losses even in those early years when no aircraft flew in the airport. It was losing P7 million a month until it was merged with the CDC in 2001. Further, the revenues from leases within 2,200 hectares [that were] due CIAC were collected by the CDC since 1996 and not the CIAC,” it said.
The CIAC began earning revenues in 2002 with the entry of United Parcel Service (UPS). The airline firms Asiana, Air Asia and Tiger Airways came next.
The CIAC, according to its finance department, has followed the recommendations of COA.
The agency is preparing documents that would be submitted to the Securities and Exchange Commission to support its request to increase CIAC’s authorized capital stock to P5 billion.
As a parent company, the BCDA has begun infusing into CIAC an equity amounting to P833 million to reduce the losses, the CIAC’s finance department said.
Victor Jose Luciano, CIAC president and chief executive officer, said CIAC officials have met with CDC representatives to determine how much funds, assets and income the CDC has given to the airport firm.
The CIAC is supposed to receive P94.8 million in 2010 and P91.07 million in 2011 from the locators, the finance department said. It said the CDC, which holds the funds, has not released any amount yet.
Luciano said from “zero revenues” from 1995 to 2002, CIAC’s revenues increased when he took over in October 2006. “In 2011, we expect to generate close to P500 million, enough to cover operating expenses,” he said.
