PAL 'not in immediate danger of bankruptcy' — company president

MANILA, Philippines — Philippine Airlines is not yet on the brink of financial collapse, the company said Thursday as the aviation industry reels from travel barriers meant to stem the spread of the new coronavirus.

In an interview with ABS-CBN News Channel, Gilbert Sta. Maria, company president, said PAL is "not in immediate danger of bakruptcy", thanks to the infusion of $600 million fresh capital approved by its shareholders last February.

“Without that liquidity, Philippine Airlines would probably not be here anymore,” Sta. Maria said.

But the flag carrier's revenue continues to bleed as travelers stay home. 

According to Sta. Maria, PAL is losing $300 million for each month that the enhanced community quarantine is in effect as its fleet of aircraft remains grounded. Luzon was placed under ECQ in mid-March and the status is still in effect in some areas in the island until the end of May. 

Including losses incurred in February and March this year, Sta. Maria said PAL lost "close to a billion dollars (P50 billion)" already.

"We can't wait to fly again. We're eagerly awaiting the end of the lockdown," Sta. Maria said.

Last April, PAL together with low-cost carriers Cebu Pacific and AirAsia wrote to regulators to ask for financial rescue as their balance sheets take a heavy beating from the global travel halt.

The declining profits and passenger traffic demonstrate the full impact of the outbreak on the airline industry, which felt the sting of the pandemic as early as January from a slew of passengers cancelling their trips amid contagion fears.

The devastation became more pronounced in March and April, when the government completely sealed off the island of Luzon from travel and barred planes from taking off, except for sweeper flights that repatriated displaced overseas Filipino workers.

As a result, PAL and other local carriers had to let go hundreds of workers to reduce costs. While it would be "inhuman" to lay off workers at a time the pandemic is roiling job markets, Sta. Maria said the fate of its staff will depend on the speed of the company's recovery. 

"The question is what the trajectory of the recovery is. If recovery is going to be rapid, then we may end up having to retain more employees than we anticipate," he said. 

"If this is a long, L-shaped recovery then all bets are off," he added.