PAL boosts capital to P 30B
Philippine Airlines Inc. (PAL) is raising funds to strengthen its business amid difficult market conditions.
PAL on Tuesday obtained the approval of shareholders to increase its authorized capital by 130 percent to P30 billion, giving the flag carrier flexibility to raise additional money.
“PAL needs new capital,” PAL president Gilbert Santa Maria told reporters after the company held a special stockholders’ meeting on Tuesday.
The plan comes as airlines around the world reel from the impact of the COVID-19 outbreak that started in China.
Local carriers, which saw flight disruptions early this year after the eruption of Taal Volcano, suspended flights to China at the start of February after the Philippines issued a travel ban in the wake of the epidemic that has killed over 1,800 people.
The country’s three largest airlines, including PAL, are expected to refund customers a combined P3 billion over a two-month period, said Roberto Lim, vice chair of Air Carriers Association of the Philippines Inc.Santa Maria did not provide additional details on PAL’s fundraising plans.
In a statement, PAL said the capital was “part of the flag carrier’s transformation towards sustainable profitability and a higher level of competitiveness.”Market conditions since the start of the year have been difficult, with the COVID-19 outbreak seen as a drag on the country’s growth in the first half of 2020. The benchmark Philippine Stock Exchange index is down about 6 percent year-to-date.
PAL Holdings’ last profitable year was in 2016, when it booked a P3.5-billion net income. It earlier said plans were underway for a turnaround or a narrowing of losses with the launch of new local and international routes.
It is reviving flights between Los Angeles and Cebu this May and also plans to add a new route via flights from Manila to Seattle.
Losses for listed operator PAL Holdings Inc. widened to P8.5 billion in its latest financing statement ending September 2019. PAL Holdings, where Japan’s ANA Holdings owns a minority stake, took a hit from a change in accounting standards that caused it to recognize higher obligations. INQ
