PAL expects to emerge from bankruptcy before year-end
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PAL expects to emerge from bankruptcy before year-end

Bilyonaryo Lucio Tan’s Philippine Airlines is anticipating a successful exit from Chapter 11 bankruptcy before the end of the year with lesser debt, a strengthened capital structure and a leaner and more efficient operating model.

“We don’t anticipate staying in the Chapter 11 process for very long. We will likely be out before the end of the year. Once we exit, we’re done. We will have a lighter balance sheet. We will have new capital, and our cost structure will be a lot lighter,” PAL president and COO Gilbert Santa Maria said in a virtual briefing.

READ: Lucio Tan’s heir apparent Hun Hun gives lolo’s assurance to customers, partners: PAL will keep flying now and long into the future

Santa Maria, however, said demand would not return to pre-pandemic level until l 2024 or 2025. For this year, he sees PAL revenues accounting for a third of the pre-pandemic level in 2019.

Last Saturday, PAL filed for bankruptcy protection in the US, paving the way for the restructuring of its contracts and the reduction of debt by at least $2 billion with the infusion of $655 million in fresh capital from Tan as well as new investors.

READ: PAL defends bankruptcy filing: Many airlines used Chapter 11 to reinvent themselves into more successful firms

Under the plan, PAL will slash fleet capacity by 25 percent.

Santa Maria said over 118 investors were invited to participate in the airline’s fund raising program. “These potential investors are looking at it. There was a general interest in continuing to support PAL,” he said.

According to Santa Maria, European manufacturer Airbus agreed to delay delivery of 13 narrow-body aircraft as well as cancel some orders beyond 2026 to 2030.

READ: Lucio Tan cheers Chapter 11 filing as ‘breakthrough’: PAL to cut fleet by 25%, debt by $2B; raise $655M in new equity, borrowings

Apart from this, Santa Maria said PAL would return 22 planes to lessors, leaving the flag carrier with 70 aircraft.

PAL incurred P18.04 billion in losses in the first half, 18 percent lower than the previous year as revenues plunged by 51 percent to P18.04 billion due to the prolonged COVID-19 pandemic.

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