The national government cannot guarantee Philippines Airlines Inc. (PAL) financing, the Department of Finance (DoF) said Tuesday.

Finance Undersecretary Gil S. Beltran, said the government – which is also in dire financial straits – is not allowed by law to guarantee loans for private corporations like the nation’s largest carrier.

“We don't guarantee for private sector debt. Actually, I don't know how the government can help them now,” Beltran said in a telephone interview.

“We only guarantee government corporations,” he added.

PAL was privatized in January 1992, after the national government sold significant shares of the company to a holding firm PR Holdings.

PAL, the country's flag carrier and Asia’s first airline, earlier said it’s seeking new investors as owner Lucio Tan may not put in fresh equity after the company posted two straight years of losses. Beltan also said the government cannot bail out PAL this time – unlike what it did in the past – because it is already in the hands of the private sector.

The Asia’s oldest airline incurred more than $350 million of losses in the past two years after making wrong-way bets on fuel prices.