PAL bares restructuring plans under Chapter 11, assures it will not affect passengers and employees
The Philippine Airlines (PAL) announced on Saturday that it has voluntarily filed for Chapter 11 bankruptcy in the United States to allow the airline to restructure and reorganize its finances as the COVID-19 pandemic continues to impact its operations due to travel bans and restrictions across the world.
As the proposed plan was filed in the Southern District of New York, PAL said the parallel filing would be made for recognition in the Philippines under the Financial Insolvency and Rehabilitation (FRIA) Act of 2010.
The airline said it has entered into a series of agreements with its lenders, lessors, aircraft and engine suppliers, and its majority shareholder regarding its restructuring plan.
In a disclosure to the Philippine Stock Exchange (PSE), PAL expressed its commitment to maintaining business continuity and customer experience throughout the restructuring process. The airline company vowed to continue operating flights in the normal course of business in accordance with safety regulations and consistently meet its current financial obligations to employees, customers, the government, and its lessors, lenders, suppliers, and other creditors.
However, the flag carrier said it would implement a 25% reduction in its fleet by returning a total of 22 aircraft to lessors from its fleet of 92 planes.
In a video statement released by PAL, its chief financial and compliance officer Nilo Rodriguez stated that the plea — which requires U.S. court approval — would allow the airline to “restructure contracts” controlled mainly by foreign laws and bring down its debt by at least $2 billion.
Video credit: facebook.com/PhilippineAirlines
Rodriguez added that it would also enable the company to secure Debtor-In-Possession (DIP) financing of $505 million to execute the recovery plan and help the airline obtain an additional $150 million in debt funding upon its emergence from Chapter 11 “with fresh capital, lower debt and a competitive cost structure that would give a sturdy foundation to sustained profitability.”
In the same video, PAL and PAL Holdings Inc. director Lucio Tan III delivered the message of his 87-year-old grandfather, PAL Chairman and CEO Dr. Lucio Tan, “It became my commitment of a lifetime to build up the airline into a flag carrier that all Filipinos could look up to with pride.” The younger Tan continued, “On the 80th anniversary of Philippine Airlines, my family and I make this renewed commitment to you: We will complete the recovery of Philippine Airlines.”
The Tans assured the public that it would maintain its position as a premier global airline of the Philippines, continue to serve its valued customers, and keep flying, now and long into the future.
Learn more about Philippine Airlines’ restructuring plan here.
Sources:
SUGGESTED ARTICLES
