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Philippine Airlines plans to seek court protection as it grapples with mounting debt
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Airline has not confirmed measure but said it’s working on a comprehensive recovery and restructuring plan
Flag carrier Philippine Airlines (PAL) plans to seek court protection from creditors as it continues to work on a “comprehensive recovery and restructuring plan” to become financially stronger after the coronavirus disease (COVID-19) pandemic.
Finance Secretary Carlos Dominguez III told media on November 25 that PAL had informed the Department of Finance of its plan last week “but gave no details on any assistance they may need from us.”
In a statement on the same day, PAL did not directly confirm the plan but said its “management and stakeholders continue to work on a comprehensive recovery and restructuring plan that will enable PAL to emerge financially stronger from the current global crisis.”
“We will make the necessary disclosures at the proper time, once details are finalized,” the airline added.
PAL parent firm PAL Holdings, Inc., in a disclosure on November 26, said it had sought clarification from the airline and “was informed that there have been no definite decision on the matter.”
“The instruction from the Board is to continue to study the best options for the airline as of this time,” it added.
PAL has been heavily hit by the COVID-19 pandemic, incurring a total comprehensive loss of P29.03 billion in the first nine months of 2020, which is 269% higher than the P7.86 billion loss incurred in the same period last year.
READ: PAL posts P29B loss in first 9 months
Consolidated revenues for January to September 2020 amounted to P45.29 billion, 61.6% lower than the P117.85 billion recognized in 2019.
In a regulatory disclosure, PAL said the huge loss and reduction in revenues were mainly due to the drop in passenger and ancillary revenues as a result of worldwide travel restrictions and flight cancellations due to the COVID-19 pandemic.
All PAL’s international and domestic flights were cancelled from mid-March until May 31, 2020 as quarantine restrictions nationwide limited air travel. PAL resumed its limited operations on June 1, 2020 with restrictions remaining in place.
But with Metro Manila and other nearby provinces reverting to modified enhanced community quarantine from August 4 until 18 due to rising coronavirus infections, all regular scheduled domestic flights to and from Manila during this period also had to be cancelled.
Domestic flights between Clark, Cebu, Davao and cities other than Manila were not affected and remain operational.
PAL said that as of September it has restored nearly 15% of its regular domestic and global network, and it intends to ramp up more flights and more routes in line with an expected easing of travel and quarantine restrictions.
The flag carrier earlier said it would be laying off this year around 2,500 workers, or 35% of its over 7,000 personnel, as part of its restructuring and recovery plan to cope with the effects of the COVID-19 pandemic.
In April 2020, PAL’s aircraft delivery schedule was revised to align with the forecasted recovery of travel demand. Aircraft deliveries for 2020 and 2021 were postponed and rescheduled for delivery in 2022-2025.
