Philippine Airlines Inc. said over the weekend it is well-positioned for long-term growth after it emerged from voluntary Chapter 11 proceedings.
PAL said it successfully completed the financial restructuring within four months, in contrast to other airlines that remained in the Chapter 11 process more than a year after filing in 2020.
The airline credits the strong support of its creditors and shareholders, the cooperation of its industry partners and the collective efforts of PAL employees around the world who sustained flights on multiple international and domestic routes throughout the restructuring period.
PAL said it streamlined operations with a reorganized fleet and is now better capitalized for future growth.
The company’s plan of reorganization, approved by the US restructuring court on Dec. 17, 2021, provides for over $2 billion in permanent balance sheet reductions from creditors, improvements in PAL’s critical operational agreements and additional liquidity including a $505-million investment in long-term equity and debt financing from PAL’s majority shareholder.
The airline’s consensual restructuring plan was accepted by 100 percent of the votes cast by its primary aircraft lessors and lenders, original equipment manufacturers and maintenance, repair and overhaul service providers and certain funded debt lenders.
“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 Tan III, quoting PAL chairman and chief executive Dr. Lucio Tan.
“This is a celebratory moment for PAL, for all our partners and stakeholders, and for our personnel who sacrificed much while working successfully to keep the airline flying,” said Gilbert Santa Maria, PAL president and chief operating officer.
“Above all, we thank our customers for their support, and the Filipino people for keeping faith in their flag carrier through the entire restructuring process,” he said.
Santa Maria said there are immense challenges ahead, but “we look forward to tackling them as a reinvigorated Philippine Airlines, better positioned for strategic growth to continue serving our customers.”
Under the newly effective recovery plan, PAL has the option to obtain up to $150 million in additional financing from new investors.
PAL reiterated its commitment to fulfill all refund obligations.
The company said it cleared over 99 percent of past refunds and is now back to normal processing times for refunds, except for some 2020 cases that require validation procedures mostly involving third party providers.