Philippine Airlines may seek the equivalent of bankruptcy protection to restructure its operations and raise funding to survive the COVID-19 pandemic. Media reports said the company is cutting around 2,700 jobs, or a third of its workforce, is also looking to return around 20 of its leased aircraft to relieve a financial burden amounting to at least US$1 billion and raise US$505 million “for post-restructuring liquidity requirements”, according to the reports.
The plans were disclosed by airline officials during an online town hall meeting with employees and in a separate meeting with the Department of Finance last week, according to people briefed about the matter and meeting materials reviewed by Nikkei Asia.
Philippine Airlines’ listed parent PAL Holdings recorded a net loss of 29 billion pesos (US$603 million) from January to September, three times larger than the 8.4 billion pesos loss a year ago. During the same period, revenue shrank to 45 billion pesos from 118 billion pesos due to widespread lockdowns imposed to fight the virus. PAL Holdings also declared a 24 billion peso capital shortfall as of end-September, the reports said.
President Gilbert Santa Maria told employees during the townhall meeting that the process was necessary to help the airline survive the pandemic. The management is also said to be looking to avoid a scenario in which an administrator would decide the airline’s fate or, even worse, an asset liquidation.
“Philippine Airlines management and stakeholders continue to work on a comprehensive recovery and restructuring plan that will enable PAL to emerge financially stronger from the current global crisis,” the company said on Wednesday. “We will make the necessary disclosures at the proper time, once details are finalised. In the meantime, we continue to gradually increase our flights operated on most of our international and domestic routes in line with market recovery.”
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