Philippine Airlines Inc. said Friday it secured an approval from US Bankruptcy Court in New York to access the first $20 million from a $505-million loan facility to support operations.
The airline unit of tycoon Lucio Tan said the US Chapter 11 court approved all “First Day” motions on an interim or final basis for PAL’s voluntary restructuring following petitions filed on Sept. 3, 2021.
It said the approvals marked an important step forward in PAL’s recovery plan, which would reduce the company’s debt by $2 billion and help the airline recover from the impact of the global pandemic.
“This is a significant step in our recovery plan and supports our ongoing operations to continue serving our valued customers and connecting the Philippines with the world. The combination of our substantial creditor support and the court’s approvals enables us to progress toward an expedited emergence and full recovery,” said PAL president and chief operating officer Gilbert Sta. Maria.
“As travel demand increases and restrictions ease, we continue to increase domestic and international flights, while maintaining the safety and health of our passengers and employees,” he said.
The orders granted by the US Bankruptcy Court for the Southern District of New York allow PAL to operate in the normal course, ensuring that the company can continue to serve customers as a full-service airline and the flag carrier of the Philippines.
PAL received authorization to honor and maintain all customer programs, including valid tickets and travel vouchers, Mabuhay Miles and benefits and refund obligations, subject to PAL’s usual terms and conditions of use. Mabuhay Miles members can expect to continue to accrue and redeem Mabuhay Miles as usual.
The airline also allows PAL to pay ongoing suppliers and trade creditors in the ordinary course for goods and services delivered throughout the Chapter 11 process.
It will continue to pay all employee wages, compensation and benefit obligations, subject to the continuation of any temporary work arrangements as necessary and maintain employee benefit programs in the ordinary course of business throughout the Chapter 11 process.
PAL was also granted to access the first $20 million of its debtor-in-possession financing totaling $505 million led by majority shareholder Buona Sorte Holdings.
The airline expects to exit from the Chapter 11 bankruptcy proceeding by end of the year.
PAL said it would continue to operate flights in the normal course of business in accordance with safety regulations.
The company said it was expecting to meet all financial obligations throughout the Chapter 11 process to employees, customers, the government, lessors, lenders, suppliers and other creditors.