PAL wants to deal with its creditors before filing for bankruptcy
MANILA, Philippines – Philippine Airlines (PAL) was closing in on filing for Chapter 11 creditor protection in the United States, joining other global carriers to protect assets during severe downturn in business caused by the COVID pandemic 19.
Citing data from Cirium, the online aviation news and information website FlightGlobal, reported that PAL was seeking a restructuring deal with creditors before filing the Chapter 11 proceedings potentially by the end of it. may.
PAL did not immediately respond to a request for comment on Wednesday.
Earlier reports indicated that PAL had total liabilities of around $ 5 billion, including its outstanding obligations to foreign aircraft suppliers.
The flag bearer belonging to the taipan Lucio Tan has been considering a Chapter 11 filing in New York since the end of 2020.
Operated by other global airlines, the move would give PAL a break while restructuring obligations to creditors and aircraft lessors. More importantly, it would protect PAL from legal action and protect its assets while the recovery plans are being implemented.
FlightGlobal has indicated that PAL is seeking the support of the majority of its creditors first.
Joseph Roxas, president of Eagle Equites Inc., said on Wednesday that filing the Chapter 11 proceeding would save PAL time as air travel remained predominantly anchored by the pandemic.
PAL, which counts Japan’s ANA Holdings as a minority shareholder, is also expected to raise new capital to support its operations, Roxas said. But that could prove difficult as the aviation industry reels from the pandemic and the government has imposed travel restrictions amid a new wave of COVID-19 infections.
“Banks have all been affected by NPLs during this time. And no matter how you look at interest rates, you still need to have good credit scores to be able to lend your money, ”Roxas said.
PAL has yet to detail its plans to raise new funds beyond the cash injections made by Tan’s private companies in 2020.
Like its competitors, PAL has scaled back operations and implemented significant job cuts to survive the global health crisis. The Philippines has also fallen behind its neighbors in the region who have significantly restored their domestic operations.
Given its extensive international network, PAL still suffered from government directives limiting the arrival of international passengers to 1,500 per day at Ninoy Aquino International Airport in Manila.
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