Philippine Airlines (PAL) says flights will continue uninterrupted and all valid tickets will be honored after it applied for Chapter 11 Bankruptcy in the US.
PAL, which has seen travel demand slump by about 75 percent due to the pandemic, is also promising that all vouchers, refund applications and frequent flyer miles will be honored.
The airline filed for bankruptcy in the Southern District of New York as part of a plan to restructure $US2 billion in debt that has been agreed upon by most of its lessors, lenders and other creditors.
The filing has seen the carrier agree to cut fleet capacity by 25 percent as it reorganizes to become “a leaner and better-capitalized airline”.
Chapter 11 provides protection from creditors as it restructures but it must be approved by the court.
The airline will also file a parallel filing under the Philippines Financial Insolvency and Rehabilitation Act.
PAL said it would continue to meet its obligations to employees, customers, the government as well as lessors, lenders, suppliers and other creditors.
The move will see an infusion of $US505m of new debt and equity from existing shareholders and domestic commercial banks to provide liquidity during restructuring.
There will also be an additional $US150 million of additional debt financing from global private investors to help post-restructuring activities.
The airline said it plans to continue to gradually increase domestic and international flights in line with the market recovery.
This includes increased flight frequencies on key regional and long-haul routes while expanding domestic networks from its hubs in Manila and Cebu.
It would also continue to operate special all-cargo flights to transport vaccines, medical supplies and sustain critical supply chains as well flights to bring overseas Filipino workers home.
“We welcome this major breakthrough, an overall agreement that enables PAL to remain the flag carrier of the Philippines and the premier global airline of the country, one that is better equipped to execute strategic initiatives and sustain the Philippines’ vital global air links to the world.’’ PAL chairman and CEO Lucio Tan said in a statement.
“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.”