Philippine Airlines (PAL) has filed for bankruptcy protection in the U.S. as the flagship airline continued grappling due to the financial turbulence it has been experiencing due to the pandemic travel fallout.
In a statement, the company said that it filed for Chapter 11 bankruptcy in the Southern District of New York so that it can “implement a consensual restructuring that it reached with substantially all of the Company’s lenders, lessors, and aircraft and engine suppliers, as well as its majority shareholder.”
“The restructuring plan, which is subject to court approval, provides over $2 billion in permanent balance sheet reductions from existing creditors and allows the airline to consensually contract fleet capacity by 25%,” it said.
According to the flag carrier, the approval of the restructuring plan will help the company to “emerge with fresh capital, lower debt and a sturdier financial foundation for the future.”
Through the restructuring plan, PAL is expecting to acquire about $505 million in long-term equity and debt financing from its majority shareholder and an additional $150 million debts from new investors.
“We are grateful to our lenders, aviation partners and other creditors for supporting the plan, which empowers PAL to overcome the unprecedented impact of the global pandemic that has significantly disrupted businesses in all sectors, especially aviation, and emerge stronger for the long-term,” billionaire Lucio Tan, PAL’s chairman and chief executive officer, said in a statement.
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