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PAL announces restructuring amid pandemic impact, says flights to continue

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Job Manahan, ABS-CBN News

<h3>PAL to implement 25 pct reduction of fleet, return planes</h3><p>MANILA - The Philippine Airlines (PAL) on Saturday announced its financial restructuring plan under the United States bankruptcy code&#x27;s Chapter 11, as the COVID-19 pandemic weighed down on its operations due to travel bans and restrictions across the world.</p><p>In a video statement, PAL President and COO Gilbert Santa Maria said the move aimed to create a &quot;permanent solution&quot; that would enable the company to guarantee its future. </p><p>A Chapter 11 filing does not mean that PAL is shutting down, but instead will allow it to reorganize to keep its business alive and pay creditors over a period of time, he said. </p><p>&quot;With this goal in mind, we have voluntarily filed for restructuring under a pre-arranged Chapter 11 in the US while simultaneously executing a support filing under the Financial Rehabilitation and Insolvency Act in the Philippines,&quot; Santa Maria said.</p><p>The airline has many US-based creditors. </p><p>Nilo Rodriguez, PAL&#x27;s chief financial and compliance officer, explained that the Chapter 11 filing would also allow the airline to &quot;restructure contracts&quot; mostly controlled by foreign laws. </p><p>The decision will also pave the way for &quot;positive actions,&quot; he said, as the market tries to recover from the pandemic.</p><p>&quot;We are thus able to ensure the execution of all such agreements under a well-established legal process that is universally accepted and can be completed expeditiously,&quot; Rodriguez added. </p><p>&quot;The restructuring will enable PAL to emerge with fresh capital, lower debt and a sturdier financial foundation for the future,&quot; a separate statement read.</p><p>Filing under Chapter 11 will also help PAL obtain an additional $150 million in debt funding, Rodriguez said.</p><p>He added that the airline would formalize agreements with lenders, lessors, and key aircraft and engine suppliers that would bring down debt by at least $2 billion.</p><div><strong>WHAT WILL HAPPEN NEXT</strong></div><p>The PAL&#x27;s customer experience will remain, said Dexter Lee, PAL&#x27;s senior vice president for strategy and planning.</p><p>The Lucio Tan-led flag carrier, however, said it would implement a 25-percent reduction in its fleet by returning &quot;several wide-body and narrow-body aircraft.&quot; </p><p>PAL will also reduce lease payments in the remaining aircraft &quot;through modified lease contracts.&quot; </p><div><strong>The airline also outlined some details of their recovery plan: </strong></div><ul>	<li>Business-as-usual operations will continue and flights will not be affected. </li>	<li>PAL will also continue accepting future tickets and previous travel vouchers.</li>	<li>Mabuhay Miles members can still earn and redeem miles or points from merchant partners.</li>	<li>All passenger and cargo flights will continue to operate subject to travel restrictions.</li>	<li>Passengers can still book and browse tickets through their website, mobile application, ticket offices, contact centers, and partner travel agents.</li></ul><p>&quot;We will maintain our current flight schedules and gradually increase our domestic and international destinations, and flight frequencies as travel demand returns,&quot; Lee noted. </p><p>PAL also put emphasis on meeting its financial obligations with partners and stakeholders throughout the process, which is why they would continue refunding tickets and applications &quot;still under process.&quot; </p><p>PAL Chairman and CEO Lucio Tan said the airline would &quot;maintain its position as a premier global airline,&quot; which would emerge better to help the country. </p><p>&quot;PAL will continue to serve its valued customers and the Philippine economy, now and long into the future,&quot; said Tan. </p><p>Philippine Airlines Holdings Inc in mid-June said it incurred a net comprehensive loss of P73 billion in 2020, reflecting the “extraordinary impact” of the COVID-19 pandemic on PAL&#x27;s operations. </p><ul class="op-related-articles">	<li><a href="https://news.abs-cbn.com/business/06/17/21/pal-net-loss-p73-billion-2020-covid-19">READ: PAL operator incurs P73 billion loss in 2020, airline to undergo restructuring</a></li></ul><p>The airline has been reported to be seeking <a href="https://news.abs-cbn.com/business/11/25/20/philippine-airlines-plans-court-protection-as-pandemic-hits-finances">court protection</a> as early as November last year.</p><p>In February, PAL announced retrenching some 2,500 or 30 percent of its workers. </p><ul class="op-related-articles">	<li><a href="https://news.abs-cbn.com/business/02/02/21/pal-cutting-workforce-by-2300-as-pandemic-continues-to-weigh-down-flights">READ: PAL cutting workforce by 2,300 as pandemic continues to weigh down flights</a></li></ul><p>Airlines have been hit hard by travel restrictions imposed to curb the spread of COVID-19. </p><p>Cebu Pacific also posted a net loss of P22.2 billion in 2020 as the pandemic cratered travel demand.</p><ul class="op-related-articles">	<li><a href="https://news.abs-cbn.com/business/03/30/21/cebu-pacific-posts-p222-billion-net-loss-in-2020-due-to-severe-pandemic-impact">READ: Cebu Pacific posts P22.2 billion net loss in 2020 due to &#x27;severe&#x27; pandemic impact</a></li></ul><p>Know more about Philippine Airline&#x27;s restructuring plan <a href="https://palrecovery.com/wp-content/uploads/2021/09/090221_CH11-Infographic.pdf">here</a>.</p><div><strong>— with reports from Jekki Pascual, ABS-CBN News</strong></div><div><strong>WATCH</strong></div><figure class="op-interactive"><iframe allow="autoplay; fullscreen" frameBorder="0" height="100%" id="ivsplayer01" scrolling="no" src="https://player.ivideosmart.com/ivsplayer/v4/dist/html/iframe-src.html?iframeid=ivsplayer01&amp;key=e8c22c015ca9eafa76f1e3edfa03c603&amp;spid=3001339&amp;vid=1689901" width="100%"></iframe></figure><div class="iwantbar">Watch more in <a href="//www.iwantv.com.ph/">iWantv</a> or <a href="//tfc.tv/">TFC.tv</a></div>

The Philippine Airlines (PAL) on Saturday announced its financial restructuring plan under the US bankruptcy code's Chapter 11.

PAL announces restructuring amid pandemic impact, says flights to continue

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PAL announces restructuring amid pandemic impact, says flights to continue

Job Manahan,

ABS-CBN News

Published Sep 04, 2021 12:27 PM PHT

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Philippine Airlines

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