BANKRUPTCY Philippine Airlines (PAL) filed for bankruptcy to stop further financial losses of its parent company PAL Holdings Inc. amounting to P71.8 billion in 2020. The pandemic struck a devastating blow to the airline after air travel almost grounded to a halt. —GRIG C.MONTEGRANDE
MANILA, Philippines — Philippine Airlines (PAL) is hoping for a swift comeback from corporate restructuring as billionaire Lucio Tan, the controlling shareholder of the airline since 1993, said his family would fully back the flag carrier amid heavy financial losses.
The airline had won the support of most of its creditors and aircraft lessors to forgive debts worth over P100 billion, formalized over the weekend through a Chapter 11 plea in the United States.
PAL chief financial officer Nilo Thaddeus P. Rodriguez said in a video message explaining the restructuring they expected to exit the Chapter 11 process “in a few months.”
Tan, who is PAL chair and CEO, appeared later in the video beside his grandson and PAL director, Lucio Tan III.
The son of the late Lucio Tan Jr., who was at the helm of the flag carrier when he died in 2019, the younger Tan delivered his 87-year-old grandfather’s message assuring all stakeholders, passengers, and employees that PAL will “keep flying, now and long into the future.”
“It became my commitment of a lifetime to build the airline into a flag carrier that all Filipinos could look up to with pride,” Tan said.
“On the 80th anniversary of Philippine Airlines, my family and I make this renewed commitment to you: We will complete the recovery of Philippine Airlines,” he said.
“We firmly support the management and employees of Philippine Airlines as they undergo the restructuring process. Together, we will deliver an airline with a reorganized balance sheet, a streamlined workforce, and a renewed sense of mission,” he added.
Tan said that PAL, which has Japan’s ANA Holdings as a minority shareholder, would also continue to support jobs and livelihoods apart from its crucial mission to link the Philippines to the rest of the world.
Saddled with growing financial losses before the pandemic, PAL was forced into survival mode when the COVID-19 arrived in early 2020, disrupting tens of thousands of flights that affected over a million passengers
Recounting the extraordinary measures PAL took to stretch dwindling finances, company president Gilbert Santa Maria said lessors agreed to defer $360 million in obligations while Tan provided $130 million in “emergency liquidity.”
The company also raised $70 million after selling a non-core asset and employees pitched in $60 million through voluntary pay cuts and extended leaves without pay.
Dexter Lee, PAL senior vice president for strategy and planning, said they also plan to boost domestic flights and add China and Australia trips once restrictions ease. The airline will also continue to offer codeshare and interline partnerships with other commercial carriers.