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. (File photo by GRIG C. MONTEGRANDE / Philippine Daily Inquirer)
MANILA, Philippines — Philippine Airlines (PAL) has completed a financial restructuring plan that wiped out $2.1 billion in debts, bolstering its bid to recover from losses due to the global health crisis.
In a statement late Friday, PAL announced its exit from a voluntary Chapter 11 bankruptcy process in the United States. The emergence, which met PAL’s year-end target, comes four months after the plea was filed last September.
“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,” said PAL director Lucio C. Tan III, who was delivering the words of his grandfather, PAL chair and CEO Lucio C. Tan.
PAL’s plan of reorganization was approved by the US Bankruptcy Court last Dec.17 after it won overwhelming support from its creditors, including aircraft leasing firms, suppliers and major banks.
Apart from slashing $2.1 billion in debts, PAL committed to streamline its business and return over 20 planes, cutting its fleet to 70 aircraft.
Throughout the process, the Tan family committed to $505 million in debt and equity capital infusions to support the flag carrier. PAL said in the statement it has the option to obtain up to $150 million in “additional financing from new investors”.
“This is a celebratory moment for PAL, for all our partners and stakeholders, and for our personnel who sacrificed much while working successfully to keep the airline flying,” Gilbert F. Santa Maria, PAL president and chief operating officer, said in the same statement.
“Above all, we thank our customers for their support, and the Filipino people for keeping faith in their flag carrier through the entire restructuring process. There are immense challenges ahead, but we look forward to tackling them as a reinvigorated Philippine Airlines, better positioned for strategic growth to continue serving our customers,” he added.
Following its emergence from the Chapter 11 process, PAL said it was targeting to mount flights to Israel and restore trips to Australia and China as borders reopen.
It also wants to broaden codeshare and interline agreements with other carriers and expand its cargo business.
Furthermore, PAL reiterated its commitment to fulfill all refund obligations.
PAL said it 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.”
“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 said.