PAL commits to pay gov't ₱6B

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Metro Manila (CNN Philippines, October 6) — The Philippine Airlines (PAL) agreed to pay the government ₱6 billion to finally settle a long-standing debt issue.

The country's flag carrier and the Department of Transportation (DOTr) in a joint statement on Friday announced they have reached a resolution.  

"The DOTr has accepted the offer of PAL to pay in full the ₱6B claims of the CAAP/MIAA, and PAL commits to keep all transactions updated and current with the CAAP/MIAA," they said.

The ₱6 billion covers navigational charges PAL owes the Civil Aviation Authority of the Philippines (CAAP) and Manila International Airport Authority (MIAA), some of which date back to 2015.

"One of the overriding reasons why PAL agreed to settle is to manifest its trust and confidence in President Duterte's administration," the statement further read.

The issue on PAL's unpaid fees gained steam last week after President Rodrigo Duterte warned PAL to settle its debts or he will have to shut down the Ninoy Aquino International Airport Terminal 2, which PAL exclusively uses for most of its regional and international flights.

Malacañang on Friday said PAL's payment "will go a long way to help build much needed infrastructure to support our economic capabilities."

"It is a clear reminder that when government prioritizes national interest citizens will cooperate," Presidential Spokesman Ernesto Abella said in a statement.

The DOTr earlier denied PAL's request to pay over ₱6 billion in arrears in seven years.

"Thus, final demand for full payment of all unpaid charges has been sent to PAL, preparatory to the filing of appropriate legal action in order to protect the interest of government," the DOTr said in its Facebook post on September 27.

PAL also initially offered the government ₱4 billion, saying only less than half or ₱3.6 billion of the ₱6.91 billion being demanded by DOTr is backed by invoices.

Read more: PAL offers to pay gov't ₱4B to settle debt issue

The airline company was a government-owned and controlled corporation with tax privileges and exemptions prior to its privatization in 1992.

CNN Philippines' Eimor Santos contributed to this report.