The recovery of Philippine Airlines, which filed for Chapter 11 bankruptcy in the United States, will depend on how deep the pocket of majority owner Lucio Tan is as the global pandemic crippled the operations of the airline industry, a former executive of the flag carrier said over the weekend.
Avelino Zapanta, former president of PAL, said it is “very difficult” for PAL to return to normalcy because of the global pandemic.
“It will depend on how deep is the pocket of Lucio Tan,” Zapanta said, adding Tan valued the airline and he would not give up easily.
The 87-year old Tan earlier infused about P16 billion into the company to support PAL’s operations amid the impact of the health crisis.
“He creates miracle in sourcing of capital,” said Zapanta, the president of PAL when it first filed for corporate rehabilitation in 1999. PAL exited from corporate rehabilitation in 2007.
PAL voluntarily filed for a pre-arranged restructuring under the U.S. Chapter 11 process in the Southern District of New York on Sept. 3 to implement the consensual restructuring plan.
Under the restructuring plan, PAL will raise $505 million in long-term equity and debt financing from majority shareholders and $150 million of additional debt financing from new investors.
The bailout deal also provides over $2 billion in permanent balance sheet reductions from creditors and consensually reduce fleet capacity by 25 percent.
“We will complete the recovery of Philippine Airlines. We firmly supports the management and employees of Philippine Airlines as they undergo restructuring process. Together, we will deliver an airline with a reorganized balance sheet a streamlined workforce and a renewed sense of mission,” said Tan, chairman and chief executive of PAL.
“Today, I will give you an assurance: Like the Philippine flag, we will continue to stand tall and strong. The national carrier and premier airline of the Philippines. Philippine Airlines will keep flying now and long into the future,” he said.
Dexter Lee, PAL ‘s senior vice president and chief strategy and planning head, said the airline would maintain its flight schedule and gradually increase domestic and international destinations and flight frequencies as travel demand returns.
“We plan to build back our network by adding services to mainland China and Australia, while boosting flights on key domestic destinations,” he said.
“For our customers, you should not experience any disruption in services throughout this restructuring process there will be no change in the way you experience PAL and will receive the same care that you have come to expect from PAL,” Lee said.
PAL earlier reported total comprehensive loss amounting to 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.
Passenger revenue amounted to P11.62 billion in the first half, while cargo revenues amounted to P5.53 billion.
Consolidated operating expenses decreased by 48.6 percent to P26.83 billion from P52.16 billion a year ago because of the significant reduction in the number of flights operated.
Manpower costs declined as a result of PAL’s retrenchment program in mid-March and expenses related to grounded aircraft which were recognized this year under other charges which also contributed to the decrease in operating expenses.
PAL announced in February a company-wide workforce reduction program covering about 2,300 employees, or 30 percent of the airline’s workforce.