Philippine Airlines files for bankruptcy

[spoon]

MANILA, Sept 6 — Philippine Airlines said Saturday it was filing for bankruptcy in the United States to slash US$2 billion (RM8.29 billion) in debt as it tries to survive an industry gutted by the coronavirus pandemic.

The national carrier of the Philippines said the filing will allow it to restructure contracts and cut debt by at least US$2 billion while getting US$655 million in fresh capital when it emerges from the Chapter 11 process.

PAL will also downsize its fleet by 25 per cent and re-negotiate contracts to reduce lease payments.

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Philippine Airlines files for bankruptcy
Monday, 06 Sep 2021 07:01 AM MYT

Philippine Airlines said the filing will allow it to restructure contracts and cut debt by at least US$2 billion while getting US$655 million in fresh capital when it emerges from the Chapter 11 process. — Reuters pic
Philippine Airlines said the filing will allow it to restructure contracts and cut debt by at least US$2 billion while getting US$655 million in fresh capital when it emerges from the Chapter 11 process. — Reuters pic
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MANILA, Sept 6 — Philippine Airlines said Saturday it was filing for bankruptcy in the United States to slash US$2 billion (RM8.29 billion) in debt as it tries to survive an industry gutted by the coronavirus pandemic.

The national carrier of the Philippines said the filing will allow it to restructure contracts and cut debt by at least US$2 billion while getting US$655 million in fresh capital when it emerges from the Chapter 11 process.

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PAL will also downsize its fleet by 25 per cent and re-negotiate contracts to reduce lease payments.

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“Philippine Airlines will continue business-as-usual operations while finalising the restructuring of our network, fleet and organisation,” senior vice president and chief financial officer Nilo Thaddeus Rodriguez said in a video message.

As part of agreements reached with suppliers, lenders and lessors, Rodriguez said PAL will secure US$505 million to execute the recovery plan. The money will later convert into airline equity and long-term debt.

It will also obtain another US$150 million in debt funding after it emerges from the restructuring process “in a few months”, Rodriguez said.

Philippine air travel volume collapsed by 75 per cent from about 30 million passengers in 2019 to seven million last year due to pandemic restrictions, PAL president Gilbert Santa Maria said in the same video.

The carrier cancelled more than 80,000 flights, wiping out US$2 billion in revenue, and let go of 2,300 employees.

Its main shareholder injected more than US$130 million in emergency liquidity and a non-strategic asset was sold for more than US$70 million.

Santa Maria said PAL now operates 21 per cent of pre-pandemic flights to 70 per cent of its usual destinations. — AFP

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Another one bite the dust..

[reader]

This begs the question: what carriers will benefit from Philippines Air fall from grace?

Since many potential customers I think would have a moment of pause before booking the carrier going forward, Qatar, Singapore and Turkish appear to be best positioned to attract former customers of the bankrupt airline. All three have better balance sheets and more frequent service, not to mention reputation.

[Guest]

26 minutes ago, reader said:

This begs the question: what carriers will benefit from Philippines Air fall from grace?

Most of these damned flag carriers just carry on after bankruptcy.    I'd rather all the airlines were independent and run by entrepreneurs, but it seems every nation wants a flag carrier.  

Your post seems to indicate Philippine Air is no exception and will carry on with a downsized fleet, probably more closely matched to downsized demand.   If demand does pick up in the next couple of years, don't bet against them leasing aircraft to support that.

[reader]

2 hours ago, z909 said:

Most of these damned flag carriers just carry on after bankruptcy.    I'd rather all the airlines were independent and run by entrepreneurs, but it seems every nation wants a flag carrier. 

I think we'll all be grateful that there are national carriers competing in the international marketplace. If you removed all of the national carriers serving east Asia, who would you have left? Damn few and fares would go out of sight for lack of competition.

Demand will be returning far sooner than a "couple of years." Count on it.

[GWMinUS]

Too bad PAL is selling off their Airbus A350s. I was hoping to fly it from LAX to MNL or better, directly to CEB-Mactan. The B777s are getting old...

For years I have booked on EVA because they fly from LAX to TPE (also on the B777) and then they have flights to CEB. Anything to avoid transiting through Manila!!

[PeterRS]

In the old pre-war days, I am told sleeping beths were relatively common for long haul routes. I wonder how many remember that Philippine Airlines was the first post-war airline in the world to introduce beds on their 747-200s in 1980. It installed 16 full flat bunk beds in the upper deck for first class passengers on their trans Pacific routes. It was also the first airline to be awarded the coveted award for its in flight cuisine by Les Chaines de Rotisseurs. The ince mighty continue to fall.

[reader]

For more photos and reflections on PAL:

https://filipiknow.net/things-we-no-longer-see-on-philippine-airplanes/