Flag carrier Philippine Airlines (PAL) is confident it will exit the Chapter 11 or corporate restructuring process by the end of the year, but revenues are unlikely to return to pre-COVID-19 levels until after 2025.
In a virtual briefing on Monday, PAL president Gilbert Santa Maria said the company started negotiating with creditors in 2020, making it easier to secure credit.
“Once we exit before the end of the year, we’re done. We will have a lighter balance sheet, we will have new capital, and our cost structure will be a lot lighter, so we will be done before the end of the year,” he told reporters.
“I don’t anticipate anything other than an asteroid hitting Manhattan, for example, stopping us from exiting,” he added, noting that the firm took its time in preparing for the undertaking.
PAL over the weekend said it filed for bankruptcy in the United States, as part of its restructuring plan. The first day of hearings is scheduled on Thursday.
Under agreements with creditors, PAL will secure some $505 million for its recovery plan upon its exit from the process — the first tranche will be a $250-million facility debt to be pared down in the next five years, and the second tranche worth $255 million will be converted into equity.
“We expect to emerge and get our plan approved by the court within this year, and that’s the target,” senior vice president and chief financial officer Nilo Thaddeus Rodriguez said in the same briefing.
“We expect that by the time that the whole process or at least the first part of this process is over, we would have maybe majority or if not 100% support of our creditors,” he added.
NOW: Officials of Philippine Airlines hold briefer on the recent bankruptcy filing in the US. Exit from the Chapter 11 process expected within the year.— Jon Viktor Cabuenas (@ViktorCabuenas) September 6, 2021
“We don’t anticipate staying in the Chapter 11 process for very long,” according to PAL President Gilbert Santa Maria. pic.twitter.com/4NDWq9GaQs
This comes even as the company does not expect demand to rebound anytime soon, given the continued implementation of quarantine restrictions both in the country and overseas.
PAL expects to end 2021 with a two-third reduction of its 2019 top line, which was a bit over $3 billion.
“We don’t foresee demand coming back to pre-pandemic levels until 2024, 2025, and at that point in time we don’t believe we will see what our size was, more than $3 billion, in 2025,” chief strategy and planning officer Dexter Lee said.
“We expect to see those numbers closer to the back half of the decade,” he explained.
In the same briefing, the carrier reiterated that it will be business as usual for the company, and that there will be no significant impact on passengers and its workforce moving forward.—AOL, GMA News