PAL completes financial restructuring

·2 min read

PHILIPPINE Airlines Inc. (PAL) announced Monday, January 3, 2022 that it has emerged from its voluntary Chapter 11 proceedings as a more efficient airline with a strengthened balance sheet.

In a disclosure to the local bourse, PAL said it had successfully completed its financial restructuring within four months, in contrast to other airlines that remain in the Chapter 11 process more than a year after filing in 2020.

The Philippine flag carrier credits the strong support of its creditors and shareholders, the cooperation of its industry partners and the collective efforts of PAL employees around the world who sustained flights on multiple international and domestic routes throughout the restructuring period.

PAL has streamlined operations with a reorganized fleet and is now better capitalized for future growth.

$2 billion reduction

The Company’s Plan of Reorganization, which was approved by the US restructuring Court on December 17, 2021, provides for over US$2.0 billion in permanent balance sheet reductions from existing creditors, improvements in PAL’s critical operational agreements and additional liquidity including a $505 million investment in long-term equity and debt financing from PAL’s majority shareholder.

The airline’s consensual restructuring plan was accepted by 100 percent of the votes cast by its primary aircraft lessors and lenders, original equipment manufacturers and maintenance, repair, and overhaul service providers and certain funded debt lenders.

“Philippine Airlines stands ready to help grow back the Philippines’ local and international air travel markets in ways that renew the tourism industry, serve the needs of global citizens including overseas Filipinos, and contribute actively to the recovery of the Philippine economy,” said PAL director Lucio Tan III, quoting PAL chairman and chief executive officer Dr. Lucio C. Tan. “Our mission as the flag carrier matters more than ever, and we are thankful for the chance to rebound from the pandemic and continue to fulfill this mission as best as we can.”

Under the newly effective recovery plan, PAL has the option to obtain up to US$150 million in additional financing from new investors.

PAL reiterated its commitment to fulfill all refund obligations. The company has cleared over 99 percent of past refunds and is now back to normal processing times for refunds, except for some 2020 cases that require validation procedures mostly involving third party providers.

Philippine Airlines Inc. was the only party included in the Chapter 11 filing.

PAL Holdings Inc., which is listed on the Philippine Stock Exchange and Air Philippines Corp., known as PAL Express, were not included in the Chapter 11 filing. (PR)

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