Flag-carrying Philippine Airlines has filed for Chapter 11 bankruptcy protection in the U.S. and while debt restructuring and financial reorganization take place, the troubled carrier does not see the arrival at a viable solution by the end of this year. Like many carriers worldwide, Philippine Airlines has been badly hit by the effects of the COVID-19 pandemic on domestic and international travel. According to the carrier, the current proposed restructuring plan has been filed with the Southern District of New York and the plan involves returning 22 mainly Boeing and Airbus aircraft currently on lease, as well as reducing borrowing by US$2 billion.
Restructuring will also involve US$505 million in long-term debt equity and debt financing from the airline’s majority shareholder as well as US$150 million of additional debt financing from new investors. However, both the parent company PAL Holdings and PAL Express are excluded from the Chapter 11 bankruptcy. According to the court filing, Lufthansa Technik and Rolls-Royce are two of the largest unsecured creditors, while ongoing suppliers and trade creditors are likely to be unimpaired. In addition to returning the 22 planned aircraft, Philippine Airways has also postponed the delivery of 13 narrow-body aircraft from Airbus.Email Post to a Friend