PAL exits bankruptcy proceedings less than four months after September 3 voluntary filing
The process allowed the airline to reduce debt and add liquidity
It said it will continue to reinstate and expand routes while investing in digital transformation and its growing cargo business
Philippine Airlines Inc. (PAL) has emerged from its voluntary Chapter 11 proceedings less than four months from the September 3 bankruptcy filing in a US court, the company said in a statement on December 31.
The flag carrier said it completed its financial restructuring, allowing it to streamline operations with a reorganized fleet. It noted the restructuring was completed in a shorter period than most typical Chapter 11 proceedings.
The reorganization plan, which was approved by the US restructuring Court on December 17, 2021, provides for over US$2 billion in permanent balance sheet reductions from existing creditors, improvements in PAL’s critical operational agreements and additional liquidity, including a US$505 million investment in long-term equity and debt financing from PAL’s majority shareholder.
Under the recovery plan, PAL has the option to obtain up to US$150 million in additional financing from new investors.
The airline’s consensual restructuring plan was accepted by 100% of the votes cast by its primary aircraft lessors and lenders, original equipment manufacturers and maintenance, repair, and overhaul service providers, and certain funded debt lenders.
The Philippine flag carrier credits the strong support of its creditors and shareholders, the cooperation of its industry partners and the collective efforts of PAL employees around the world who sustained flights on multiple international and domestic routes throughout the restructuring period.
“Philippine Airlines stands ready to help grow back the Philippines’ local and international air travel markets in ways that renew the tourism industry, serve the needs of global citizens including overseas Filipinos, and contribute actively to the recovery of the Philippine economy,” said PAL Director Lucio C. Tan III, quoting PAL Chairman and CEO Dr. Lucio C. Tan.
“Our mission as the flag carrier matters more than ever, and we are thankful for the chance to rebound from the pandemic and continue to fulfill this mission as best as we can.”
“This is a celebratory moment for PAL, for all our partners and stakeholders, and for our personnel who sacrificed much while working successfully to keep the airline flying,” said Gilbert F. Santa Maria, PAL President and Chief Operating Officer.
He acknowledged “immense challenges ahead, but we look forward to tackling them as a reinvigorated Philippine Airlines, better positioned for strategic growth to continue serving our customers.”
The airline said it will reinvest in operations to better serve its valued customers by:
- reinforcing its position as the Philippines’ sole full-service airline with the largest international network;
- restoring more routes and increasing flight frequencies as travel restrictions ease and borders reopen;
- building on code-sharing and interline partnerships to complement the airline’s current and future network and allow PAL passengers to enjoy access to more destinations through partner airlines;
- expanding newly established cargo business to tap more air cargo market opportunities, including the operation of all-cargo flights to keep supply chains moving and to meet specific freight transport needs such as the airlift of vaccines and medical equipment; and
- accelerating digital transformation initiatives, including a more personalized website and mobile app, a streamlined booking process that offers more flexible payment options such as e-wallets and installment plans, enhanced self-service options for rebooking and check-in, and improved chat facilities and inter-active voice response functions through PAL’s contact center.
PAL reiterated its commitment to fulfill all refund obligations. The
Company said it has cleared over 99% of past refunds and is now back to normal processing times for refunds, except for some 2020 cases that require validation procedures mostly involving third-party providers.
Philippine Airlines Inc. was the only party included in the Chapter 11 filing; while PAL Holdings Inc., which is listed on the Philippine Stock Exchange, and Air Philippines Corporation, known as PAL Express, were not included in the Chapter 11 filing.