PAL eyes court protection from creditors

MANILA, Philippines — Flag carrier Philippine Airlines (PAL) intends to seek court protection from creditors as it undertakes debt restructuring as part of ongoing efforts to ensure the airline’s survival.

“PAL 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 airline said.

PAL did not disclose further details of the plan, saying that necessary disclosures would be made at the proper time once details are finalized.

“In the meantime, we continue to gradually increase our flights operated on most of our international and domestic routes in line with market recovery,” it said.

Finance Secretary Carlos Dominguez said PAL informed the Department of Finance of its plan to seek court protection in its debt restructuring last week.

Dominguez, however, said PAL gave no details on any assistance they may need from the agency.

PAL saw its losses swell further to P29.03 billion in the nine months ending September as operations continued to be severely affected by global travel restrictions due to the COVID-19 outbreak.

PAL had announced a manpower reduction initiative that could affect up to 35 percent of the airline’s more than 7,000 workforce, which will combine voluntary and involuntary measures to be carried out within this quarter.

It has already let go of 300 people last March, 200 of whom were retrenched and 100 opted to retire early.

PAL’s 2020 and 2021 aircraft deliveries were postponed and rescheduled for delivery in 2022 to 2025.

Given the mounting losses and prevailing travel restrictions, the airline two weeks ago said it continues to receive funding support from its shareholders to help keep the company afloat amid escalating losses due to the pandemic.

“The airline’s shareholders continue to provide funding support, as PAL continues to undertake revenue generating and cost control measures as part of its business restructuring initiatives in the coming months,” it said.

The challenges being faced by the aviation industry, however, may be far from being over, with the International Air Transport Association (IATA) saying that deep industry losses will continue into 2021, even though performance is expected to improve.

Based on its revised outlook for airline industry performance, the airline industry is seen incurring a net loss of $118.5 billion this year, deeper than IATA’s $84.3 billion forecast in June.

A net loss of $38.7 billion is expected next year, also larger that the previous forecast of $15.8 billion.

IATA expects to see improvements in the second half of next year after a difficult first half.

“The history books will record 2020 as the industry’s worst financial year, bar none. Airlines cut expenses by an average of a billion dollars a day over 2020 and will still rack-up unprecedented losses,” IATA director general and CEO Alexandre de Juniac said.

“The prospect of losing $38.7 billion next year is nothing to celebrate. We need to get borders safely re-opened without quarantine so that people will fly again. And with airlines expected to bleed cash at least until the fourth quarter of 2021 there is no time to lose,” he said.