PAL files for bankruptcy in New York as part of restructuring
Philippine Airlines Inc. (PAL) on Saturday announced it has filed for bankruptcy in the Southern District of New York as part of its restructuring plan.
In a press release, the company said it would also do a parallel filing in the Philippines under the Financial Insolvency and Rehabilitation (FRIA) Act of 2010.
The company, however, said flights will continue without interruption, and it will honor all valid tickets, travel vouchers, refund applications and Mabuhay Miles and benefits.
Likewise, passengers and employees will be "unaffected by the restructuring," PAL said.
It also said part of the restructuring plan, subject to court approval, is to reduce by at least $2 billion its liabilities to lessors, lenders and other creditors.
The plan also calls for 25% fleet capacity reduction and an infusion of $505 million of new debt and equity funding from the existing majority shareholder.
The company also said it has arranged for $150 million debt financing from global private investors for post-restructuring activities.
It clarified though that only Philippine Airlines Inc. filed for bankruptcy. Listed company PAL Holdings Inc. and Air Philippines Corporation (PAL Express) are not part of the filing.
The restructuring and reorganization of finances were adopted to help PAL navigate the COVID-19 pandemic and emerge as an airline that is leaner and better capitalized, the company said.
“We welcome this major breakthrough, an overall agreement that enables PAL to remain the flag carrier of the Philippines and the premier global airline of the country, one that is better equipped to execute strategic initiatives and sustain the Philippines’ vital global air links to the world. We are grateful to our lenders, aviation partners and other creditors for supporting the plan, which empowers PAL to overcome the unprecedented impact of the global pandemic that has significantly disrupted businesses in all sectors, especially aviation, and emerge stronger for the long-term,” PAL chairman and CEO Lucio Tan said.
"Following the recent celebration of our 80th anniversary, we move forward with renewed confidence, as today’s actions enable us to continue serving our customers and the Philippine economy long into the future. I would also like to recognize the incredible dedication of our employee teams around the world, who have continued to deliver the highest quality of service through these trying times,” PAL president and chief operating officer Gilbert Santa Maria said.
PAL said it is committed to continue with its business throughout the restructuring process.
It said it is anticipating receiving the requisite approvals from the US court to allow the company to increase gradually its domestic and international flights in line with market recovery.
"In coming weeks, PAL will build up flight frequencies on key regional and long-haul routes while expanding domestic networks from its hubs in Manila and Cebu," the company said.
PAL also gave the assurance that passenger and cargo flights will continue operating.
It will also honor valid travel benefits of retired employees.
"Ongoing suppliers and trade creditors will be paid in the ordinary course for goods and services delivered throughout this process," PAL said.
The company also said it will continue operating special flights to transport vaccines and medical supplies, and mounting flights to bring repatriated overseas Filipino workers home in coordination with the Philippine government.
"PAL continues to innovate and enhance customer experience by working with the government and IATA on streamlined rules for travel, including travel passes and vaccine 'passports' while maintaining the highest standards of passenger safety through this pandemic," it added. —KG, GMA News