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Philippine Airlines Exits Chapter 11 Bankruptcy
Just a few hours before one of the worst years on record for commercial aviation came to a close, Philippine Airlines announced it was exiting U.S. Chapter 11 bankruptcy protection after successfully restructuring its business.
Less than four months earlier, the airline had voluntarily entered Chapter 11 on Sept. 3 and was able to emerge from bankruptcy after its turnaround plan was accepted by all its creditors, including aircraft lessors and lenders, OEMs, MRO providers and other debt lenders, Businesswire reported.
The strong support from all the creditors allowed for over $2 billion of existing debts to be permanently eliminated from the carrier’s balance sheet. At the same time, over $505 million of additional liquidity was arranged through long-term equity and debt financing. PAL also has the option to avail of $150 million of extra financing from new investors.
“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.”
Fewer Planes and an All-Cargo Unit
The new business plan included a cut to its fleet by approximately 25% while contextually reaffirming PAL’s role as the only full-service carrier in the country with a network extending as far West as Israel and as far East as Canada, Hawaii and the U.S. mainland, including also multiple services to Australian cities like Brisbane and Melbourne.
It is the only domestic carrier providing a business class cabin and it has a predominantly Airbus fleet including A320 and A321 aircraft with the A320s being progressively replaced by Airbus A321neo with delivery planned until 2026. The long-haul fleet includes 10 Boeing 777-300ER aircraft, 12 A330-300 and four newer A350-900 XWBs.
Philippines Airlines will restore its links to multiple cities in mainland China as soon as restrictions to international traffic into the country are lifted in order to capitalize.
The Covid-19 pandemic decimated passenger numbers in the Philippines: domestic and international traffic collapsed by more than 75% from the 60 million passengers recorded in 2019 to the 13 million passengers of 2020, Channel News Asia reports.
A particular focus will be placed on competitive pricing, an overhaul of the Mabuhay Miles frequent flier program and improvement in customer experience, with a special focus on technological improvements.
The newly-created cargo business unit created to respond to increased freight transport demand during the pandemic will be expanded and will include all-cargo flights.
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