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PAL to raise capital stock to P30B from P13.B
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Expansion of capital is in line with restructuring that began in 2021
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Before restructuring, the airline’s debts had reached $2 billion
Philippine Airlines (PAL) has received the go signal from the Philippine Stock Exchange (PSE) to raise its capital stock to P30 billion.
With the hiked capitalization, the flag carrier may free up space for fresh investments from its parent unit.
PAL’s capital stock was previously P13.5 billion, with each share valued at P1.
In its disclosure to the PSE, the airline said with the capital hike, it can now receive fresh funding from its parent company, the LT Group of taipan Lucio Tan.
PAL had been required to expand its capitalization in line with the restructuring it began in 2021.
Three years ago, PAL filed for restructuring under Chapter 11 before the US Bankruptcy Court in New York. This allowed it to clear more than $2 billion in debt.
The restructuring involves the infusion of $505 million from its majority owners and the reduction of its fleet by 25%. PAL will now be down to 70 aircraft for local and international flights.
In a statement, PAL said: “The purpose of the proposed increase in the authorized capital of the issuer is to accommodate the fresh infusion of capital into the company by an affiliate company of the Lucio Tan Group of Companies.”
The fresh capital will then be invested into the issuer’s subsidiary PAL, “pursuant to the court-supervised reorganization” of the airline, the statement also said.
Business and operations of Asia’s first airline remains the same despite the change in capital stock. Only the funding structure will change to reflect the fresh investments.
PAL earlier told local media it was open to welcoming new partners who can contribute to its expansion.
This year, the airline is spending up to $450 million for capital expenditures to build up its fleet, with 80% of the amount set aside for airline upgrades, since 18 of its Airbus A321ceos will be renovated.
Since its 2021 restructuring, PAL has been able to nurse its finances back to health, earning a profit of P16.81 billion in 2023 and P8.16 billion in 2022.
In October, this year, the airline will launch direct flights from Manila to Seattle, marking its sixth US route and eighth in North America.
