Flag carrier Philippine Airlines on Saturday said restructuring will not affect its passengers and employees.
The airline has voluntarily filed for a pre-arranged restructuring under the US Chapter 11 process in the Southern District of New York to implement the consensual restructuring plan. A Chapter 11 bankruptcy allows a company to stay in business and restructure its obligations.
In a statement, PAL said the parallel filing would be made for recognition in the Philippines under the Financial Insolvency and Rehabilitation (FRIA) Act of 2010.
This plea, which requires a US court approval, would provide over USD2 billion payment reductions and other changes from the majority of lessors, lenders, and other creditors.
At least USD505 million infusion via equity and debt will come from its majority shareholder.
PAL has arranged for USD150 million of additional debt financing from global private investors to facilitate post-restructuring activities.
The trade creditors and suppliers are expected to be unimpaired by the restructuring plan, PAL said, adding that passengers and employees will also be unaffected by the restructuring.
“PAL will continue to operate flights in the normal course of business in accordance with safety regulations, and the company expects to continue to meet its current financial obligations throughout this process to employees, customers, the government, and its lessors, lenders, suppliers, and other creditors,” the statement read.
Business operations would continue as usual during restructuring.
As the carrier expects the US court’s approval of its plea, PAL will continue to gradually increase its domestic and international flight operations.
It plans to build up flight frequencies on key regional and long-haul routes, and also expand domestic networks from its hubs in Manila and Cebu.
Passengers’ valid tickets and vouchers, “Mabuhay miles” and benefits will still be honored, PAL said, while also reaffirming to fulfill refund obligations.
Passenger and cargo flights will continue to operate, subject to demand and travel restrictions.
PAL will also continue to operate special all-cargo flights to transport vaccines, and medical supplies. It will also continue to work with the Philippine government to mount repatriation.
“We are grateful to our lenders, aviation partners and other creditors for supporting the plan, which empowers PAL to overcome the unprecedented impact of the global pandemic that has significantly disrupted businesses in all sectors, especially aviation, and emerge stronger for the long-term,” PAL chairman Lucio Tan said.*PNA