PAL exits Chapter 11 bankruptcy process

MANILA, Philippines — Philippine Airlines Inc. (PAL) has emerged from its voluntary Chapter 11 proceedings, successfully completing its financial restructuring in a much faster period compared to other airlines globally which underwent the same bankruptcy process.

The flag carrier announced late Friday that it has exited Chapter 11 in less than four months after its filing last Sept. 3 in the US, in contrast to other airlines that remain in the Chapter 11 process more than a year after filing in 2020.

With this, PAL said it is now a more efficient airline with a strengthened balance sheet that is well-positioned for long-term growth with reduced debt and additional liquidity.

“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,” PAL president and chief operating officer Gilbert Santa Maria said.

The airline has credited 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.

“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. 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,” Santa Maria said.

PAL’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.

The company’s reorganization plan was approved by the US restructuring court last Dec. 17.

It provides for over $2 billion in permanent balance sheet reductions from existing creditors, improvements in PAL’s critical operational agreements and additional liquidity, including a $505 million investment in long-term equity and debt financing from the company’s majority shareholder.

PAL has the option to obtain up to $150 million in additional financing from new investors.

The airline also streamlined operations with a reorganized fleet, and is now better capitalized for future growth.

The company said it has 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.

It reiterated its commitment to fulfill all refund obligations.

Moving forward, PAL said it would reinvest in its operations to better serve its customers.

The flag carrier intends to restore more routes and increase flight frequencies as travel restrictions ease and borders reopen, including the resumption of regular flights to multiple cities in mainland China, full regularization of flights to Australia, and the commencement of historic new services to Israel.

The company is also planning to roll out new product advancements this year as part of a commitment to continuously upgrade services and the overall customer travel experience.

“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 his grandfather and PAL chairman and CEO Lucio Tan.

“Our mission as the flag carrier matters more than ever, and we are thankful for the chance to rebound from the pandemic and continue to fulfill this mission as best as we can,” Tan said.