PAL Holdings Inc., the operator of Philippine Airlines, said Friday it filed an application with the Securities and Exchange Commission to raise its capital to P30 billion from P13.5 billion to allow additional capital infusion by the Lucio Tan Group.
“The purpose of the proposed increase of authorized capital of the Issuer is to accommodate the fresh infusion of capital into the company by an affiliate company of the Lucio Tan Group of Companies,” PHI said.
“The new capital will in turn be invested into issuer’s subsidiary, Philippine Airlines, pursuant to the court-supervised reorganization of PAL,” it said.
PHI said the business and operations of the issuer would not be affected by the proposed amendment of its article of incorporation.
“Only the capital structure of the issuer will change to reflect the fresh infusion of cash into the company. The new shares in support of the increase of capital will be issued at a premium over par,” it said.
The US Bankruptcy Court of the Southern District of New York earlier approved the reorganization plan of PAL after receiving creditor support throughout the process.
The consensual plan was accepted by 100 percent of the votes cast, which were from PAL’s primary aircraft lessors and lenders, original equipment manufacturers and maintenance, repair and overhaul service providers and certain funded debt lenders.
The plan provides for over $2 billion in permanent balance sheet reductions from creditors, allows PAL to consensually contract fleet capacity by 25 percent, improves PAL’s critical operational agreements and includes $505-million investment in long-term equity and debt financing from PAL’s majority shareholder.
The effective date of the plan was expected to occur before the end of 2021.
PAL continues to operate flights to 32 international and 29 domestic destinations from its hubs in Manila, Cebu and Davao.
The flag carrier expects to restore more routes and increase flight frequencies as travel restrictions ease and borders reopen.
Following implementation of the plan, PAL said it would be better positioned to capture travel demand and serve the needs of global citizens, actively contributing to the Philippine economy.
PHI reported comprehensive loss of P27.19 billion from January to September 2021, down 6.3 percent from P29.03-billion loss it incurred in the same period last year. Consolidated revenues fell 29 percent to P32.16 billion from P45.29 billion last year on the impact of the continuing COVID-19 pandemic that started in mid-March of 2020.
Passenger revenue amounted to P21.76 billion in the nine-month period, lower from the previous year’s P35.55 billion while cargo revenue climbed 47 percent to P8.9 billion from P6.05 billion.
Consolidated operating expenses fell 36.7 percent to P42.75 billion from P67.52 billion on the significant reduction in the number of flights operated.