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| PAL begins restructuring process, vows to meet all obligations Posted: 03 Sep 2021 10:14 PM PDT FLAG carrier Philippine Airlines, Inc. (PAL) announced on Sept. 4, 2021 that it has begun bankruptcy proceedings in the United States to be able to stay in business and restructure its obligations amid the coronavirus disease 2019 (Covid-19) pandemic. PAL assured that "it is business as usual." All passenger and cargo flights will continue uninterrupted, subject to demand and travel restrictions. All tickets, vouchers and Mabuhay Miles remain valid. Passengers and employees will not be affected. The company said it will continue to meet its current financial obligations to employees, customers, the government, and its lessors, lenders, suppliers, and other creditors. In a statement posted by public relations firm Business Wire, the airline said it filed for a pre-arranged restructuring under the U.S. Chapter 11 process in the Southern District of New York. It will complete a parallel filing for recognition in the Philippines under the Financial Insolvency and Rehabilitation (FRIA) Act of 2010. Chapter 11 is a bankruptcy proceeding that allows the reorganization of a debtor's business affairs, debts and assets. PAL Holdings Inc., which is listed on the Philippine Stock Exchange, and Air Philippines Corporation, known as PAL Express, are not included in the Chapter 11 filing. The move was initiated after PAL entered into a series of agreements with its lenders, lessors, and aircraft and engine suppliers as well as its majority shareholder. "This is the best path forward to strengthen PAL as the Philippines' global flag carrier," the company said in a statement posted on its Facebook page. The company said the restructuring plan will provide over US$2 billion permanent balance sheet reductions from existing creditors and allow the airline to consensually contract fleet capacity by 25 percent. It also includes US$505 million in long-term equity and debt financing from PAL's majority shareholder and US$150 million of additional debt financing from new investors. "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," Dr. Lucio C. Tan, PAL chairman and CEO, said in the statement. "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," Tan added. PAL said it is seeking approval from the US court to allow the following:
The airline also said it will continue to work with the Philippine government in mounting repatriation flights to bring overseas Filipino workers (OFWs) home. (Marites Villamor-Ilano / SunStar Philippines)  This posting includes an audio/video/photo media file: Download Now |
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