Philippine Airlines (PAL) has emerged from its voluntary Chapter 11 proceedings as a more efficient airline with a strengthened balance sheet, reaffirming its continuing role as the Philippines’ sole full-service airline with the largest international network.
PAL successfully completed its financial restructuring within four months, in contrast to other airlines that remain in the Chapter 11 process more than a year after filing in 2020. PAL has streamlined operations with a reorganized fleet and is now better capitalized for future growth. The company’s Plan of Reorganization, which was approved by the U.S. restructuring court on December 17, 2021, provides for more than $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 PAL’s majority shareholder.
The airline’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.
Moving forward, PAL will reinvest in its operations and reinforce its position as the Philippines’ sole full-service airline with the largest international network serving four continents. The airline retains its position as the sole carrier offering non-stop flights linking the Philippines to the U.S., Canadian East and West coasts, Hawaii, Brisbane and Melbourne. It operates the largest network of flights from the Philippines to multiple cities in Japan, Australia and the Middle East, along with convenient schedules to Hong Kong, Korea, Taipei, Singapore, Thailand, Indonesia, Vietnam and Malaysia.
The carrier will focus on restoring more routes and increasing 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 new services to Israel.
PAL will work on code sharing and interline partnerships to complement its current and future network. The airline will also expand its newly established cargo business to tap more air cargo-market opportunities, including the operation of all-cargo flights to keep supply chains moving and to meet specific freight transport needs such as the airlift of vaccines and medical equipment.
The airline will focus on accelerating digital transformation initiatives to deliver seamless experiences to its customers, including a more personalized website and mobile app, a streamlined booking process that offers more flexible payment options such as e-wallets and installment plans, enhanced self-service options for rebooking and check-in, and improved chat facilities and inter-active voice response (IVR) functions through its contact center.
Under the newly effective recovery plan, PAL has the option to obtain up to $150 million in additional financing from new investors. PAL reiterated its commitment to fulfill all refund obligations. The company has cleared over 99 percent of past refunds and is back to normal processing times for refunds, except for some 2020 cases that require validation procedures mostly involving third-party providers.
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