Flag carrier Philippine Airlines, Inc. (PAL) announced on Saturday that the United States bankruptcy court overseeing its Chapter 11 proceedings approved during a hearing on Friday its recovery plan.
The US Bankruptcy Court of the Southern District of New York approved the embattled airline’s reorganizational plan aimed at reducing its debt, streamlining its fleet, and acquiring additional liquidity, the flag carrier said.
“The plan provides for over $2 billion in permanent balance sheet reductions from existing creditors,” the airline said in an e-mailed statement.
At the same time, the plan allows the flag carrier “to consensually contract fleet capacity by 25%.”
It also includes a $505-million investment in long-term equity and debt financing from the airline’s majority shareholder.
The court hearing was held on Dec. 17, while the deadline for filing objections to the plan was Dec. 10.
“The consensual plan was accepted by 100% of the votes cast, which were from PAL’s primary aircraft lessors and lenders, original equipment manufacturers and maintenance, repair, and overhaul service providers, and certain funded debt lenders,” PAL said.
The airline said the effective date of the recovery plan is expected before the end of the year.
“Today’s court approval represents a critical moment in our journey to emerge as a stronger airline,” PAL President and Chief Operating Officer Gilbert F. Santa Maria said.
“We are thankful for our loyal customers, dedicated employees, and the support of our shareholders and partners and government, which has enabled us to move efficiently through the process and reach this milestone,” he added.
PAL still has to go through a few more procedural steps before it can complete the Chapter 11 process. “After [that], we will focus intensely on serving the public, navigating the continuing challenges of the pandemic and economic recovery, and sustaining the links that connect our archipelago,” the airline’s chief executive officer said.
The airline recently reported a loss of $11.67 million, or P582.65 million, for November, three months after filing for Chapter 11 bankruptcy protection, resulting in a cumulative loss of $69.09 million, or P3.45 billion.
To recall, PAL ended October with a loss of $27.87 million, or P1.4 billion.