It only provides just over 20% of its pre-2019 flight volume to 70% of its destination network... It is the airline Philippine Airlineswhich continues to suffer from the near-total closure of the Philippines' borders since the covid pandemic in 2020. And last weekend it filed for bankruptcy, but the American way.
The carrier wishes to place itself under the chapter 11 of the united states bankruptcy protection act. This procedure, which was used extensively by American companies in the 1990s, suspends all debt repayments until the company's finances have been fully restored.
Such an operation - if accepted by the judges of the Southern District of New York, where the company filed its application - would have a major effect. It would allow PAL to freeze 2.1 billion in debt payments on its aircraft and other assets. It would also enable it to obtain $655 million in fresh capital when it emerges from Chapter 11 proceedings.
PAL has in fact been mired in financial difficulties for many years, despite two rescues of the carrier in the 1990s and early 2000s. The company has been losing money since 2016with losses reaching a cumulative $455.5 million by the end of 2019 for the PAL Holdings Inc. group.
The pandemic since 2020 has exacerbated the carrier's difficulties with the collapse of the local air market. From 30 million trips in 2019, the Philippines recorded just 7 million passengers last year. PAL had to cancel 80,000 flights last year, losing two billion in revenue. As a result, in 2020 alone the company recorded a historic loss of $1.43 billion!
Bankrupt but optimistic!
PAL is committed to reducing its fleet by more than 20%. Some 21 out of a total of 95 aircraft are expected to be returned shortly.. It will also renegotiate its leasing contracts for the other aircraft in service.
Passengers, however, are expected to be only marginally affected. "Philippine Airlines will continue to operate as usual while finalising the restructuring of its network, fleet and organisation," said Nilo Thaddeus Rodriguez, Vice President and Chief Financial Officer.
The company's management is even cultivating a degree of optimism. In a press conference held online with the Philippine media, Gilbert Santa Maria, Chairman of PAL, explained that PAL was preparing for the long term. The company expects pre-pandemic demand returns around 2024 or 2025.
A modernised fleet of just 70 aircraft would also give it greater flexibility to open up new destinations. Particularly in Europe - where PAL still provides some flights to London- and also in Israel.
"We are a traditional carrier. We're going to strengthen our core business. We're also going to improve our brand and our marketing, and turn ourselves around in this way", emphasised Gilbert Santa Maria. The Chairman is confident that the company will emerge from Chapter 11 by 2022..
