Philippine Airlines said Wednesday it is set to implement another financial restructuring to protect the flag carrier from further bleeding amid the COVID-19 pandemic.
“Philippine Airlines management and stakeholders continue to work on a comprehensive recovery and restructuring plan that will enable PAL to emerge financially stronger from the current global crisis,” PAL said.
The airline, which exited from court-administered corporate rehabilitation in 2017, did not provide further details. “We will make the necessary disclosures at the proper time, once details are finalized,” it said.
An executive of PAL said the airline would implement the financial restructuring, but did not disclose how they would proceed with the plan. The airline earlier reduced its workforce by a third after flight revenues fell by more than 60 percent, resulting in over P29 billion in losses.
PAL in 1998 suspended paying $2.07 billion in debt to creditors after entering into corporate rehabilitation. In 2017, the Securities and Exchange Commission approved the early exit of PAL from corporate rehabilitation.
PAL said in the meantime it would continue to gradually increase flights on most of international and domestic routes in line with market recovery.
PAL’s parent firm PAL Holdings Inc. earlier reported total comprehensive loss of P29.03 billion from January to September, up 269 percent from the P7.86-billion loss in the same period last year.
PHI said the comprehensive loss reached P7 billion in the third quarter, also up from P4.85 billion a year ago.
Consolidated revenues in the first nine months plunged 61.6 percent to P45.29 billion from P117.85 billion it booked in 2019.
“The reduction in revenues was mainly due to the drop in passenger and ancillary revenues as a result of flight cancellations starting March 2020 due to COVID-19,” PHI said.
The airline also laid off about 2,700 employees because of the travel restrictions and the COVID-19 pandemic.
The International Air Transport Association said deep industry losses were expected to continue into 2021. “Aggressive cost-cutting is expected to combine with increased demand during 2021 [due to the re-opening of borders with testing and/or the widespread availability of a vaccine] to see the industry turn cash-positive in the fourth quarter of 2021 which is earlier than previously forecast,” the group of airline operators said.
“This crisis is devastating and unrelenting. Airlines have cut costs by 45.8 percent, but revenues are down 60.9 percent. The result is that airlines will lose $66 for every passenger carried this year for a total net loss of $118.5 billion,” said Alexandre de Juniac, IATA director-general and chief executive.
“This loss will be reduced sharply by $80 billion in 2021. But the prospect of losing $38.7 billion next year is nothing to celebrate. We need to get borders safely re-opened without quarantine so that people will fly again. And with airlines expected to bleed cash at least until the fourth quarter of 2021 there is no time to lose,” said de Juniac.
IATA said the COVID-19 crisis challenged the industry for its very survival in 2020. “In the face of a half trillion-dollar revenue drop [from $838 billion in 2019 to $328 billion] airlines cut costs by $365 billion [from $795 billion in 2019 to $430 billion in 2020],” the group said.
“The history books will record 2020 as the industry’s worst financial year, bar none. Airlines cut expenses by an average of a billion dollars a day over 2020 and will still rack-up unprecedented losses. Were it not for the $173 billion in financial support by governments we would have seen bankruptcies on a massive scale,” said de Juniac.