Philippine Airlines Inc. said Friday it secured a US court approval to gain access to its debtor-in-possession financing amounting to $505 million, a core feature of the flag carrier’s restructuring plan.
“This important step confirms that our recovery process is on track as we continue to work hard on securing a fully consensual reorganization plan in an efficient manner,” said PAL president and chief operating officer Gilbert Santa Maria.
“We want to thank our lenders, aviation partners and other creditors for their high level of support and confidence in the future of PAL. We also appreciate the support of our valued customers as we continue to serve travelers and the Philippine economy,” he said.
PAL’s DIP financing totals about $505 million, consisting of a $250-million first lien secured Tranche A multi-draw term loan, of which $20 million was drawn following approvals on the “First Day” court hearing on Sept. 9 and a second lien secured Tranche B multi-draw term loan facility of $255 million.
“With approval to fully access our DIP financing, PAL has the additional liquidity needed to meet our current and future obligations and to continue operating as usual. PAL will emerge a leaner and more competitive airline thanks to our hardworking employees, the resolute commitment of our majority shareholder and the strong support from our stakeholders and creditors,” said PAL chief financial officer Nilo Thaddeus Rodriguez.
“We’re grateful that the court saw fit to approve our motions, and we’re told it was a most efficient Chapter 11 hearing for a case of this complexity,” he said.
PAL said that aside from the approval of the DIP financing, the US Bankruptcy Court for the Southern District of New York granted other approvals on a final basis including PAL’s motions for customer programs, critical and foreign vendors, employee compensation and authorization to implement the airline’s restructuring support agreements with stakeholders. These approvals will enable PAL to emerge as a stronger and better-capitalized airline, it said.
PAL said it would continue to operate flights in the normal course of business in accordance with safety regulations and expects to continue to meet financial obligations throughout the Chapter 11 process to employees, customers, the government, and its lessors, lenders, suppliers and other creditors.
The airline expects to exit from the Chapter 11 bankruptcy proceeding by end of the year.
PAL also filed for recognition in Pasay Court as required under the Philippine Financial Insolvency and Rehabilitation Act of 2010.
The airline incurred comprehensive loss of P18.04 billi1on in the first half, down 18 percent from P22.02-billion comprehensive loss in the same period last year.
Consolidated revenues in the six-month period declined by 51 percent to P18.04 billion from last year’s P36.82 billion because of the effect of continuing COVID-19 pandemic which started in mid-March of 2020.
