MANILA, Philippines — Flag carrier Philippine Airlines (PAL) has received regulatory approval to raise its capital stock to P30 billion to free up space for fresh investments from its parent unit.
In a disclosure to the Philippine Stock Exchange, PAL’s parent PAL Holdings Inc. said it secured approval from the Securities and Exchange Commission to proceed with its application to increase its authorized capital.
As such, PAL’s capital stock more than doubled to P30 billion from P13.5 billion with each share carrying a par value of P1.
PAL said the capital hike means that it can receive additional funding from one of the companies under the LT Group. The flag carrier owned by taipan Lucio Tan is required to expand its capital in line with the restructuring it pursued in 2021.
In 2021, the Tan-owned carrier filed for restructuring under the US Chapter 11 process in the United States Bankruptcy Court in New York court to clear more than $2 billion in debts. The restructuring involved the infusion of $505 million from its majority owners and the reduction of its fleet by 25 percent to 70 aircraft.
“The purpose of the proposed increase in the 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,” PAL said.
“The new capital will in turn be invested into the issuer’s subsidiary, Philippine Airlines, pursuant to the court-supervised reorganization of PAL,” it added.
PAL said its business and operations would remain the same even with the change in capital stock, noting that only the funding structure will change to reflect the fresh investments.
An earlier report by The STAR indicated that the Tan family is reviving a longstanding plan to pick up a new investor. PAL confirmed that it is open to welcoming new partners who can contribute to the expansion pipeline of the airline.
For 2024, PAL is spending as much as $450 million for capital expenditures to build up its fleet. The airline is allocating at least 80 percent of that amount for aircraft upgrades, especially as it is out to renovate 18 of its Airbus A321ceos.
In October, PAL will mount direct flights between Manila and Seattle, marking the sixth route of the airline in the US and its eighth in North America.
Since its restructuring in 2021, PAL has succeeded in nursing its finances back to health, raking in a profit of P16.81 billion in 2023, from P8.16 billion in 2022.