COA: DOTC agency losing millions

By Michael Punongbayan, The Philippine Star

Posted at Sep 11 2012 09:54 AM | Updated as of Sep 11 2012 05:54 PM

MANILA, Philippines – The Philippine Aerospace Development Corp. (PADC), an attached agency of the Department of Transportation and Communications (DOTC), has been losing money since 2007, according to the Commission on Audit (COA).

Records show that in the past five years, the PADC could not meet its target revenue.

It projected a P62.410-million income in 2007 but only got P29.889 million, P359 million in 2008 but earned P28.163 million, P92.776 million in 2009 but got P28.408 million, P77.361 million in 2010 but earned only P43.213 million, and P62.915 million in 2011 but realized only P35.243 million.

PADC is mandated by law to undertake all manner of activity, business or development projects for the establishment of a reliable aviation and aerospace industry in the country.

Its job includes the designing, assembly, manufacture, and sale of all forms of aircraft and aviation and/or aerospace devices, equipment or contraptions, and studies or researches for innovation and improvements, among others.

But since the government-owned and controlled corporation (GOCC) has been losing millions in its operations, the COA thinks management should consider closing down.

In a 2011 report released recently, state auditors said the agency’s revenue in the performance of its mandate hardly sustains its operations, which casts doubt on the agency as a going concern.

The audit team noted that PADC’s primary sources of income include sales of aircraft, service parts, service man-hours, and over-the-counter sales of parts.

“For several years, PADC has incurred net loss which already accumulated in the total amount of P194.585 million as of Dec, 31, 2010,” the COA report said.

State auditors revealed that the PADC earned a net income of P4.399 million for calendar year 2011 due to the present leadership’s success in looking for other sources of income and tight budgeting of expenses.

“However, even though the corporation is slightly picking up, we observed that a majority of its revenue came from other sources like rental income and collection of hangar fees. Revenue from repairs and service parts of P3.649 million comprises only 10.07 percent of its total revenue of P36.231 million,” the report said.

The audit team also reported that based on 2009 National Statistics Office records, PADC has a very minimal .22 percent share of the P12.9-billion revenue of the Manufacturing Air and Space Craft Industry.

“Competition in the aircraft manufacturing industry greatly affected PADC’s revenue. Competitive prices offered by the private sector on the maintenance, overhaul and repair service turned out to be a great burden for the corporation to meet,” it explained.

The COA report urged the management to take a serious look at the corporation’s status and “evaluate its present activities and operation in relation to its mandate.”

The PADC management, in response, said that it is fully aware of this predicament and had taken great strides to address the dilemma.

The PADC was established in 1973 as the government’s arm for the development of the Philippine aviation industry.

The DOTC secretary sits as PADC’s chairman.