Tan, who owns 70 per cent of the airline and had assumed most chief executive functions in recent months, will remain chairman but director Luis Juan Virata, the chief of investment bank Jardine Fleming Exchange Capital, has been named acting CEO, chief adviser Peter Foster told Reuters.

``It was deemed appropriate by Tan that he hand over control of the CEO position temporarily,'' Foster said. ``We very much welcome Virata's involvement. ''

Chief finance officer Jaime Bautista will be promoted to chief operations officer and other senior levels of management were also completely revamped, he said.

``Bautista and myself will be running the day-to-day operations,'' said Foster, who resigned as Cathay Pacific Airways general manager for Taiwan and the Philippines to take over last week as thechief adviser at PAL.

He brought with him four other executives formerly with Cathay and its parent Swire Pacific. The team has been given wide powers to turn PAL around.

PAL, which has $2.0 billion in debts and briefly closed down in September because of labour problems, has had to work with creditors and the securities and exchange commission (SEC) to maintain operations.

Manila newspapers have said creditors have demanded a down- payment of $60 million of their dues by the end of the month but said PAL was unable to pay that amount.

Tan's relinquishment of control was an attempt to placate them, the Philippine Daily Inquirer said. Foster refused to comment but said efforts were being made to pay creditors some part of their dues by January 29. He did not give details.

On Wednesday, the SEC announced that the team responsible for the rehabilitation of PAL would include Virata, Bautista, Foster and other members of his management team and an SEC representative. It dropped three officials believedto be close to Tan.

``During the term of rehabilitation of Philippine Airlines, which I understand will reach a maximum of 10 years, the seat of management and the key decisions that will be made will be resting on the professional rehabilitation receiver,'' SEC chief Perfecto Yasay said in a radio interview on Thursday.

``The board of directors, the body which is supposed to represent majority owners in the management of the company, will be marginalised.'' Foster said the team, called the interim rehabilitation receiver (IRR), had been approved by the creditors.

``The IRR has been changed to our complete satisfaction and the satisfaction also of our principal secured creditors, and that's really important,'' he said.

The cash-strapped airline also is hoping for a fresh injection of equity from overseas, although Cathay and Northwest Airlines have rejected the offer after evincing initial interest.

``That's something that's under process and what I can say is we have had some very positiveindications of interest,'' Foster said.

The former Cathay executive said he was confident of nursing PAL back to health. ``We have received extremely positive feedback that people have responded to the challenge and people have demonstrated a huge amount of goodwill and willingness to help us get back on our feet.''