Flag-carrying Philippine Airlines has filed for Chapter 11 bankruptcy protection in the United States, and while debt restructuring and financial reorganization are underway, the embattled carrier does not expect to have a sustainable solution before the end of the year.
Philippine Airlines, like many other carriers throughout the world, has been severely impacted by the COVID-19 pandemic’s impact on domestic and international travel.
According to the carrier, the new suggested restructuring plan has been filed with the Southern District of New York, and it entails returning 22 leased aircraft, primarily Boeing and Airbus, as well as decreasing borrowing by US$2 billion.
The restructuring will also include US$505 million in long-term loan equity and debt financing from the airline’s largest shareholder, as well as an additional US$150 million in debt financing from new investors.
The parent firm, PAL Holdings, and PAL Express, on the other hand, are both exempt from the Chapter 11 bankruptcy.
Lufthansa Technik and Rolls-Royce are two of the major unsecured creditors, according to the court filing, but ongoing suppliers and trade creditors are likely to be unaffected.
In addition to returning the 22 planned aircraft, Philippine Airways has delayed the arrival of 13 Airbus narrow-body aircraft.