Philippine Airlines Inc (PAL) said it has emerged from bankruptcy after a US court approved its plan to slash up to US$2 billion in debt and obtain additional capital.
The national carrier of the Philippines filed for bankruptcy in the US in September last year, seeking relief from creditors as it tried to survive the devastation unleashed on the airline industry by the COVID-19 pandemic.
Its court-approved reorganization plan includes a US$2 billion debt reduction and additional liquidity of US$505 million from its main shareholder, PAL said in a statement on Friday.
It also has the option to obtain up to US$150 million in additional financing from new investors.
“PAL has streamlined operations with a reorganized fleet and is now better capitalized for future growth,” the airline said.
The flagship carrier, majority owned by billionaire Lucio Tan (陳永栽), is one of several to have entered debt restructuring in the US.
Aeromexico and Colombia’s Avianca Holdings have sought court protection in New York.
Air travel in the Philippines collapsed by more than 75 percent in 2020 due to travel restrictions imposed to contain COVID-19, Philippine government data showed.
From 60 million domestic and international passengers in 2019, traffic plunged to just more than 13 million in 2020.
In September, PAL said that it had canceled more than 80,000 flights, wiping out US$2 billion in revenue, and let go of more than 2,000 employees.
As borders reopen and travel restrictions ease, the airline said it would resume regular flights, including to cities in China and Australia.
The global aviation sector has taken a beating as international travel ground to a halt due to COVID-19. The emergence of the Omicron variant of SARS-CoV-2 has triggered new border restrictions and business closures, clouding the outlook for recovery.
The Bloomberg World Airlines Index, which consists of stocks of 32 global carriers, is poised for its second straight year of decline, the first such successive run of losses since 2002.
Additional reporting by Bloomberg
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