MANILA (BLOOMBERG) – Philippine Airlines (PAL) expects to emerge from Chapter 11 bankruptcy “in a few months”, chief financial officer Nilo Thaddeus Rodriguez said in a video on Saturday (Sept 4) explaining the company’s restructuring.
Majority-owned by billionaire Lucio Tan, the carrier filed for Chapter 11 bankruptcy in New York on Sept 3 with a lender-supported plan to help it recover after the coronavirus pandemic devastated global travel.
It aims to cut US$2 billion (S$2.7 billion) in borrowings, will get US$505 million in equity and debt financing from its majority shareholder and US$150 million of debt financing from new investors. “These permanent actions will enable Philippine Airlines to emerge from Chapter 11 in a few months with fresh capital, lower debt and a competitive cost structure,” Mr Rodriguez said in a video message posted on YouTube.
The Tan family firmly supports the restructuring process and vows to complete the carrier’s recovery, PAL director Lucio Tan III said in the same video message, reading a statement from his grandfather Lucio Tan. The airline is holding a briefing on the restructuring on Monday. It has said the programme will allow it to reduce its fleet by 25 per cent.
The cuts will mainly involve Airbus SE A350s, A330s and Boeing 777 aircraft, according to Sobie Aviation consultant Brendan Sobie, who said premium economy will be removed.
PAL is likely to focus on the domestic market as well as west coast North America, a traditionally profitable long-haul route, and North and South-east Asia, Mr Sobie wrote in an e-mail. “Highly unprofitable” routes such as London, New York and Toronto, will be cut, he said.
“Foreign airlines could benefit the most given the long-haul cuts,” Mr Sobie said. “PAL will not cut back much on the routes also operated by local competitors Cebu Pacific and Philippines AirAsia, which will now have to contend with a stronger PAL.”