Makati City Bakuna
Advertisement

Gov’t asking ‘bankrupt’ PAL to pay P570m in obligations

Finance Secretary Carlos Dominguez III said over the weekend the government will collect around P570 million from flag-carrier Philippine Airlines and wholly-owned subsidiary PAL Express, representing their outstanding obligations as of Aug. 31, 2021.

Dominguez said he received a message from Transportation Secretary Arthur Tugade about the financial obligations of PAL and PAL Express.

Tugade said PAL had an obligation of P373 million and PAL Express P197 million. He said the amounts were known “upon verification with our finance... as of 31 August 2021.”

Dominguez said he asked Tugade “to intensify collection efforts.”

Tugade also told Dominguez that moving forward, “PAL and PAL Express committed to make current all their obligations to CAAP, incurred from July 2021 onwards.”

“All obligations prior to July 2021 shall be subject to reconciliation and immediate payment, the terms of which to be agreed between CAAP and PAL [subject to final board approval],” Tugade said.

Philippine Airlines Inc. said Friday it secured an approval from the US Bankruptcy Court in New York to access the first $20 million from a $505-million loan facility to support operations.

The Lucio Tan-led airline 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.

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.

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.

Topics: Finance Secretary Carlos Dominguez III , bankrupt , PAL , PAL Express , outstanding obligations
COMMENT DISCLAIMER: Reader comments posted on this Web site are not in any way endorsed by Manila Standard. Comments are views by manilastandard.net readers who exercise their right to free expression and they do not necessarily represent or reflect the position or viewpoint of manilastandard.net. While reserving this publication’s right to delete comments that are deemed offensive, indecent or inconsistent with Manila Standard editorial standards, Manila Standard may not be held liable for any false information posted by readers in this comments section.
AdvertisementGMA-Congress Trivia 1
Advertisement