PAL gets 'BB' rating from Fitch

Flag carrier Philippine Airlines (PAL) has secured its first-ever “BB” long-term issuer default rating (IDR) with a stable outlook from global credit watcher Fitch Ratings, citing the company’s leading market position.

In a commentary, Fitch said the rating reflects PAL’s diversified network and business mix, its stronger cost-efficiency as a hybrid airline with its sister company Air Philippines Corp. (APC), and prudent fleet expansion strategy.

“PAL is the only full-service domestic carrier in the Philippines, with around 30% share of the domestic passenger market and a leading 23% share of international passenger traffic to and from the country,” it said.

“PAL has maintained its market share over the past decade because capacity constraints and slot scarcity at Manila's Ninoy Aquino International Airport (NAIA) limited new entrants,” it added.

A "BB" rating is considered speculative, meaning the company is currently able to meet its financial obligations but remains vulnerable to adverse business or economic conditions that could increase its risk of default.

For its part, PAL welcomed the rating as a “recognition of the progress” after the carrier exited the Chapter 11 bankruptcy process in 2022.

“We remain focused on maintaining financial prudence while delivering world-class excellence and elevating the experience we provide to our customers at every stage of their journey,” PAL president Richard Nuttall said in a separate statement. — BAP, GMA News