Sinangla pati ang ‘miles’: Lucio Tan to use Mabuhay Miles program in his proposed $505M loan to save PAL
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Sinangla pati ang ‘miles’: Lucio Tan to use Mabuhay Miles program in his proposed $505M loan to save PAL

Bilyonaryo Lucio Tan wants the Mabuhay Miles program to be included as collateral in his proposed $505 million debtor-in-possession (DIP) loan to his bankrupt Philippine Airlines.

READ: Lucio Tan’s game plan: Bye-bye New York, London, missionary routes, Clark airport as PAL focuses on China, West Coast, Manila, Cebu

In the flag carrier’s Chapter 11 filing in a New York court, PAL CFO Nilo Thaddeus Rodriguez said the airline’s frequent flier program would be added as new collateral to the $505 million DIP financing from Tan’s holding firm, Buona Sorte, and PAL’s parent, the Tan-controlled PAL Holdings.

READ: Lucio Tan averts PAL closure in September after court OKs $20M in financing

In a briefing, PAL officials admitted that this was probably the “first, rare” occasion that a loyalty program would be used to secure an airlines loan.

READ: Gasping for air: PAL says it won’t last beyond September if it doesn’t get $20M in fresh cash from Lucio Tan

Rodriguez said all the collateral used in the $100 million bridge loan extended by Tan to PAL in the first half of 2021 would also be used to secure the $505 million DIP financing.

READ: PNB, ChinaBank, BDO, AUB, UnionBank: Find out the biggest local creditors of PAL aside from Lucio Tan

PAL said the Mabuhay program was critical to keeping its customers worldwide. It also reiterated its serious commitment in honoring all its obligations under this travel perks plan.

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

Mabuhay Miles generated $21.4 million in revenues or one percent of PAL’s turnover in 2019. As of May this year, Mabuhay had 4.9 million members.

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

Under the Mabuhay frequent flyer program, members can earn travel rewards by simply accumulating mileage credits earned on flights with PAL and its partner airlines.

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

Mabuhay members can also earn miles through the purchase and use of services from mileage partners, including credit card providers, banks, telecommunications services, hotels and resorts, tour operators, cruise services, insurance providers, car rentals, and other merchandise and travel companies.

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

PAL has proposed to use the $505 million DIP facility to prepay Tan’s $100 million bridge loan, provide an immediate $20 million cash infusion to ensure that the airline survives beyond the third week of September, and ensure minimum liquidity to survive through its Chapter 11 filing

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