Philippine Airlines said it filed for Chapter 11 bankruptcy in the U.S. on Friday, with a counterpart filing in Manila, to allow it to restructure its finances and continue operating "business as usual".
The goal is to pare down the flag carrier's debt by "at least" $2 billion and returning some aircraft, including wide-body jets, to cut back on costs," it said in a video message on its website. It plans to secure another $150 million in debt after emerging from Chapter 11.
For passengers, all tickets and travel vouchers will be honored, the airline said. "We will continue to fly and to serve our customers throughout this process: it is business as usual for us."
Earlier this year, PAL reduced its workforce by 30% equivalent to some 2,300 workers.
The 80-year-old airline, Asia's first, survived this long by "stretching liquidity, extraordinary cost control and deferred CAPEX (capital expenditures)," said President and COO Gilbert Sta. Maria.
Since travel restrictions started in the first quarter of 2020, Sta. Maria said travel volumes collapsed to 7 million from 30 million.
Sta. Maria said PAL cancelled 80,000 flights total, affecting 1.5 million passengers and strading thousands. As of September, it was flying at 21% of capacity and 70% of destinations pre-pandemic.
The airline deferred $316 million in loans for aircraft leases and negotiated extended payment terms with suppliers. Its largest shareholder also infused $130 million in emergency liquidity, he said.
Philippine Airlines earned $70 million from the sale and a non-strategic asset and $60 million from pay cuts and leaves without pay.
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