$300-M infusion saves PAL from bankruptcy for now
Taipan Lucio Tan has pumped into Philippine Airlines (PAL) some $300 million (P15.2 billion) in capital, saving the airline from immediate bankruptcy while it waits for emergency loans that will help it survive the coronavirus pandemic.
PAL president Gilbert Santa Maria told the ABS-CBN News Channel on Thursday that a third of the advances, or about P5 billion, were deployed this year alone to keep the airline afloat as the virus grounds carriers around the world.
“Without that liquidity, Philippine Airlines would probably not be here anymore,” Santa Maria said.
Santa Maria said prospects remained shaky as the carrier was expected to exit the lockdown by the end of this month with revenue losses of about $1 billion while recovery for the industry could take a few years.For now, he said PAL “is not in immediate danger of bankruptcy.”
“We are dealing with a situation that is unprecedented. Our shareholders continue to support us and the government appears to be willing to support us as well,” Santa Maria said, referring to appeals for government support in securing emergency credit lines.
“We are hanging on. We are waiting to fulfill our mission as the flag carrier,” he added.
Santa Maria said PAL was not considering any near-term job cuts after laying off 300 employees, or 5 percent of its workforce, in February.
“At this point in time, it will be extremely inhuman of us to drop our employees on the streets while a pandemic is raging,” Santa Maria said.
“The reality is that demand is probably not going to recover for about two years so we will have an excess of employees. The question is going to be what the trajectory of the recovery will be,” he added.
Those challenges are mirrored across airlines around the world. Dubai-based Emirates is reportedly planning to cut 30,000 jobs while Air Canada plans to lay off 20,000 workers.
PAL had survived past crises before and it was prepared to do the same this time around.
“Philippine Airlines is almost 80 years old. We have a great deal of muscle memory, a great deal of experience embedded in our employees,” Santa Maria said.
The lifting of strict quarantine measures by the end of this month will allow PAL and other local carriers to restore some flights.
Santa Maria said they expected to reopen with 5-10 percent of their international network and 20-30 percent of local flights by June.
“We will slowly ramp up as demand picks up,” he said, noting that destinations would include transpacific flights to Los Angeles and San Francisco apart from regional flights to Japan and Singapore.
PAL’s listed operator, PAL Holdings Inc., on Wednesday said losses in 2019 ballooned to P10.3 billion, marking its third consecutive year in the red. Japan’s ANA Holdings, which owns a minority stake in PAL Holdings, said it would continue to support the flag carrier.
