FLAG carrier Philippine Airlines (PAL) has begun bankruptcy proceedings in a court in the United States.
But PAL assured it will continue to fly and to serve its customers throughout this process.
“PAL will continue to operate flights in the normal course of business in accordance with safety regulations, and the Company expects to continue to meet its current financial obligations throughout this process to employees, customers, the government, and its lessors, lenders, suppliers, and other creditors,” it said in press release on Saturday, Sept. 4, 2021.
PAL said it has begun a US Chapter 11 financial restructuring process which is a globally recognized U.S. legal process that many airlines have used to reinvent themselves into more successful companies.
The restructuring will enable PAL to emerge with fresh capital, lower debt and a sturdier financial foundation for the future, it said.
“We welcome this major breakthrough, an overall agreement that enables PAL to remain the flag carrier of the Philippines and the premier global airline of the country, one that is better equipped to execute strategic initiatives and sustain the Philippines’ vital global air links to the world,” said Dr. Lucio Tan, PAL Chairman and CEO.
The restructuring plan, which is subject to court approval, provides over US$2.0 Billion in permanent balance sheet reductions from existing creditors and allows the airline to consensually contract fleet capacity by 25 percent and includes US$505 million in long-term equity and debt financing from PAL’s majority shareholder and US$150 million of additional debt financing from new investors.
“We are grateful to our lenders, aviation partners and other creditors for supporting the plan, which empowers PAL to overcome the unprecedented impact of the global pandemic that has significantly disrupted businesses in all sectors, especially aviation, and emerge stronger for the long-term,” Tan added.
PAL said it will continue to increase domestic and international flights as travel demand recovers with the easing of travel restrictions, and roll out new products and services that help make flying safer and more convenient.
Mandaue Chamber of Commerce and Industry president Steven Yu said the filing of Chapter 11 by PAL and its commitment to stay operational and afloat despite the pandemic is a relief for the traveling public.
“Without PAL, the future recovery of the travel and tourism industry will be very gloomy. PAL has at least half of domestic and international capacities combined,” he said.
For travel and tourism, Yu said they expect full recovery to pre-pandemic levels in late 2023 based on latest assumptions. (JOB)