Philippine Airlines (PAL) has secured an inaugural Ba2 Corporate Family Rating from Moody’s Ratings with a stable outlook, becoming the first ASEAN airline to receive a public international credit rating from a “Big Three” agency.
The rating is positioned three notches below the Philippine sovereign credit rating of Baa2. Moody’s said the grade reflects the resilience of the flag carrier following its restructuring and its dominant role in the national aviation market.
The agency cited the lean cost structure and strong long-haul franchise of the airline as key stabilizers against global fuel volatility and the ongoing Middle East conflict.
“This inaugural Ba2 rating is a powerful validation of progress we have made over the past five years’ enhancing operational reliability, rebuilding our network with discipline, and improving our cost and capital structure,” PAL president Richard Nuttall said.
The rating is expected to broaden the access of the company to diverse funding sources while providing stakeholders with independent assurance of financial resilience in a complex global aviation landscape, Nuttall added.
Moody’s cited the strong position of the airline as the national flag carrier and its steady domestic and international market share as key strengths. The agency also recognized an improved balance sheet and leaner cost structure in the years following the 2021 Chapter 11 restructuring of the company.
However, the agency noted ongoing industry challenges including exposure to global fuel price volatility and evolving travel demand dynamics. PAL also faces a continued fleet investment program.
While Moody’s acknowledged potential indirect exposure to higher fuel costs amidst the conflict in the Middle East, it pointed to risk management measures as a mitigating factor. PAL has secured its fuel supply through the end of June 2026 following the recent declaration of an energy emergency by the Philippine government.
The stable outlook reflects the expectation that PAL will maintain market leadership and continue to prudently manage its sizable fleet expansion plans. Deutsche Bank acted as the sole credit rating advisor for PAL during the exercise.
