MANILA (AFP) – Philippine Airlines (PAL) said yesterday it was filing for bankruptcy in the United States (US) to slash USD2 billion in debt as it tries to survive an industry gutted by the coronavirus pandemic.
The national carrier of the Philippines said the filing will allow it to restructure contracts and cut debt by at least USD2 billion while getting USD655 million in fresh capital when it emerges from the Chapter 11 process. PAL will also downsize its fleet by 25 per cent and re-negotiate contracts to reduce lease payments.
“PAL will continue business-as-usual operations while finalising the restructuring of our network, fleet and organisation,” Senior Vice President and Chief Financial Officer Nilo Thaddeus Rodriguez said in a video message.
As part of agreements reached with suppliers, lenders and lessors, Rodriguez said PAL will secure USD505 million to execute the recovery plan. The money will later convert into airline equity and long-term debt.