The US Bankruptcy Court of the Southern District of New York has approved the reorganization plan of debt-saddled Philippine Airlines after receiving creditor support throughout the process.
“Today’s court approval represents a critical moment in our journey to emerge as a stronger airline. We are thankful for our loyal customers, dedicated employees, and the support of our shareholders and partners and government, which has enabled us to move efficiently through the process and reach this milestone,” said Gilbert F. Santa Maria, PAL president and chief operating officer.
“We have a few more procedural steps to take before we can complete the Chapter 11 process, after which we will focus intensely on serving the public, navigating the continuing challenges of the pandemic and economic recovery, and sustaining the links that connect our archipelago,” he added.
The consensual plan was accepted by 100 percent of the votes cast, which were from PAL’s primary aircraft lessors and lenders, original equipment manufacturers and maintenance, repair, and overhaul service providers, and certain funded debt lenders.
The plan provides for over $2 billion in permanent balance sheet reductions from existing creditors, allows PAL to consensually contract fleet capacity by 25 percent, improves PAL’s critical operational agreements, and includes $505 million investment in long-term equity and debt financing from PAL’s majority shareholder.
The effective date of the plan is expected to occur before the end of 2021.
PAL continues to operate flights to 32 international and 29 domestic destinations from its hubs in Manila, Cebu and Davao.
The flag carrier expects to restore more routes and increase flight frequencies as travel restrictions ease and borders reopen.
Following implementation of the plan, PAL will be better positioned to capture travel demand and serve the needs of global citizens, actively contributing to the Philippine economy, it said