PAL on Sunday began international flights for the first time since shutting down on September 24. An Airbus 320 flew president Joseph Estrada to Singapore on his first foreign trip after taking office in June.

"It's a 'Go'," PAL executive vice-president Manolo Aquino said on Sunday, referring to the financially distressed flag carrier's plan to resume international operations on October 15 after a 13-day closure.

Problems with the US creditors may force PAL to use the smaller Airbus 340-300 instead of its two leased Boeing 747-400 planes in swings to Los Angeles and San Francisco, which have large Filipino communities.

"We have a problem with Eximbank (US Export-Import Bank)," Aquino told Reuters. "They want to take (the airplanes) back. We're negotiating with them right now."

PAL isseeking to halt the termination of leases on two Boeing 747-400s financed by Eximbank, one of several US creditors to whom the airline owes about $400 million. Aquino said PAL wanted to use the jumbos for the peak travel season later in the year.

"Hopefully, we would be able to come up with an agreement with the US Exim at that particular time," he said.

All told, PAL owes about $2 billion to 9,000 foreign and domestic creditors, including suppliers, airline officials said.

The huge debts and labour troubles forced the 57-year-old carrier, Asia's oldest airline, to close in September.

It soared back into domestic skies 13 days later after President Estrada persuaded its main Union to accept a management offer of 20 per cent equity in exchange for a 10-year freeze on strikes and wage haggling.

PAL also wants European creditors, who hold about 75 per cent of its debts, to approve a rehabilitation plan it will submit to the Philippine Securities and Exchange Commission (SEC).

SEC approval of the planwould be the green signal for PAL to implement a recovery program intended to set it back on its feet.

PAL initially plans to resume international services with two daily flights to Hong Kong and three or four flights each week to at least seven other foreign destinations, senior vice-president for sales Avelino Zapanta said.

The destinations include San Francisco, Los Angeles, Taipei, Xiamen, Fukuoka, Narita and Singapore. Later it hopes to add Osaka and the Saudi Arabian cities of Riyadh and Dahran.

Zapanta said 18 to 19 planes would initially service domestic and international routes, compared to the 54-strong fleet PAL used before a pilots' strike in June brought it down.

Since resuming domestic services last week, PAL's passenger load capacity has risen from an average of 30 to 35 per cent to more than 60 per cent, airline officials said.

"The normal is about 75 per cent. We should hit that may be by the second or third week," Aquino said.The airline expects business to pick up after itfinalises a deal with any of several prospective investors seeking a stake.

PAL officials have named Hong Kong's Cathay Pacific Airways and Northwest Airways Corp as among those who have shown interest.

"They are into intensive analysis of our operations. They are very enthusiastic," Aquino said. He did not specify which airline or investor.PAL's chief financial officer Jaime Bautista said last week the airline would fly at a loss for the next two years but would turn around and become profitable in the third year.