Philippine Airlines (PAL) is determined to maintain its status as the country’s premier carrier and will remain relentless in its pursuit of profitability despite the headwinds that threaten the airline.
The carrier will continue to operate despite implementing a restructuring program through the filing of a Chapter 11 bankruptcy protection in the United States, its president Gilbert F. Sta. Maria said.
“We move forward with renewed confidence, as today’s actions enable us to continue serving our customers and the Philippine economy long into the future,” he said.
The flag carrier is now implementing its business continuity plan, including the mounting of more domestic and international flights “in line with market recovery.”
It is also increasing frequencies of regional and long-haul routes, as well as domestic routes from its hubs in Manila and Cebu.
Cargo flights will remain unhampered, especially those that require the transportation of vaccines, medical supplies, and those that are critical to sustain the supply chain.
PAL, which celebrates its 80th anniversary this year, is no stranger to crises like this. In 1999, it also implemented a rehabilitation plan after its pilots conducted a strike that crippled the airline the year prior. It was placed under receivership, but was able to roll out the rehab plan, which allowed the airline’s operations to return to normal.
This year’s rehab plan for PAL involves various internal and external factors that could make or break the airline in the long run.
Aside from making its workforce “leaner,” it is also cutting its fleet by 25 percent.
The restructuring plan will enable PAL to reduce its debt of over $2 billion from lessors, lenders, and creditors through the infusion of $505 million of new debt and equity from existing shareholders and domestic banks as well as $150 million of additional debt from global private investors for “post-restructuring activities.”
The filing for Chapter 11 Bankruptcy Protection is still subject to the approval of a New York Court. The first hearing for the said case is set for September 9, according to official documents from the carrier’s claims agent KCC.
PAL will also complete a parallel filing for recognition in the Philippines under the Financial Insolvency and Rehabilitation (FRIA) Act of 2010. “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’s vital global air links to the world,” PAL Chairman Lucio C. Tan said.
Its parent company, PAL Holdings Inc., which is not included as a filing entity for the case, has been struggling to regain profitability for several years now. The pandemic exacerbated this, as the majority of the legacy carrier’s operations were put on hold due to travel restrictions around the globe.