Philippine Airlines (PAL) has reached a deal with lessors and creditors for more than $ 2 billion in payment cuts, as it files for Chapter 11 bankruptcy in New York.
The deal covers lenders, lessors, aircraft manufacturers and engine suppliers, as well as its majority shareholder, the carrier said.
The move will allow the restructuring of the company and the reorganization of its finances.
“The restructuring plan, which is subject to court approval, provides for more than S $ 2.0 billion in permanent reductions in the balance sheet of existing creditors and allows the airline to consensually contract the capacity of its fleet 25% and includes S $ 505 million in equity and long-term debt financing. majority shareholder of PAL and S $ 150 million in additional debt financing from new investors, ”says PAL.
The restructuring only covers Philippine Airlines, not parent company PAL Holdings or PAL Express. In addition to the Chapter 11 bankruptcy filing in New York City, the airline is also filing for recognition under the auspices of Philippine Insolvency and Financial Rehabilitation Law.
The airline adds that it will continue to operate flights normally.
“We welcome this major breakthrough, a comprehensive agreement that allows PAL to remain the national airline of the Philippines and the nation’s leading global airline, a company better equipped to execute strategic initiatives and maintain vital global air links. Philippines to the world, ”said Dr. Lucio C Tan, President and CEO of PAL.
“We are grateful to our lenders, aviation partners and other creditors for supporting the plan, which enables PAL to weather the unprecedented impact of the global pandemic that has significantly disrupted businesses across all industries, including aviation, and comes out stronger in the long term. . “
From the PAL restructuring declaration
- PAL continues to gradually increase domestic and international flights in line with the market recovery. In the coming weeks, PAL will increase the frequencies of its flights on major regional and long-haul routes while developing its national networks from its hubs in Manila and Cebu.
- All passenger and cargo flights will continue to operate, subject to demand and travel restrictions.
- All valid tickets and travel vouchers will be honored.
- PAL reaffirms its commitment to fulfill all reimbursement obligations.
- Mabuhay miles and benefits will be honored.
- Travel benefits valid for retired employees will be honored.
- Outstanding trade suppliers and creditors will be paid in the ordinary course for goods and services provided throughout this process.
- Travel agencies and other business partners will not experience any disruption in their interactions with PAL.
- PAL continues to operate special all-cargo flights to transport vaccines, medical supplies and support critical supply chains.
- PAL continues to work with the Philippine government to organize flights to bring Filipino Overseas Workers (OFWs) home after repatriating the majority of Filipinos displaced during the global pandemic.
- PAL continues to innovate and improve the customer experience by working with the government and IATA on streamlined travel rules, including travel passes and vaccine “passports”, while maintaining the highest standards. higher passenger safety levels during this pandemic.