Philippine Airlines Inc. (PAL) has secured US Court approval to fully access the $500 million in debtor-in-possession (DIP) financing, a core feature of the flag carrier’s restructuring plan.
“This important step confirms that our recovery process is on track as we continue to work hard on securing a fully consensual reorganization plan in an efficient manner. We want to thank our lenders, aviation partners and other creditors for their high level of support and confidence in the future of PAL,” said Gilbert Santa Maria, PAL president and chief operating officer.
PAL’s DIP financing totals approximately $505 million comprising a $250 million first lien secured tranche A multi-draw term loan, and a second lien secured tranche B multi-draw term loan facility of $255 million.
“With approval to fully access our DIP financing, PAL has the additional liquidity needed to meet our current and future obligations and to continue operating as usual. PAL will emerge a leaner and more competitive airline thanks to our hardworking employees, the resolute commitment of our majority shareholder and the strong support from our stakeholders and creditors,” said Nilo Thaddeus Rodriguez, PAL chief financial officer.
In addition to the approval of the DIP financing, the US Bankruptcy Court has granted other approvals on a final basis including PAL’s motions for customer programs, critical and foreign vendors, employee compensation and authorization to implement the airline’s restructuring support agreements with stakeholders.
PAL said these approvals will enable it to emerge as a stronger and better-capitalized airline.
PAL added it will continue to operate flights in the normal course of business in accordance with safety regulations, and expects to continue to meet all its current financial obligations throughout the Chapter 11 process to employees, customers, the government and its lessors, lenders, suppliers and other creditors.
As of September, PAL is operating 27 percent of its pre-pandemic capacity. Its operations should reach 50 to 60 percent to achieve breakeven cash operating cost.
PAL is gearing up to expand international and domestic flights in anticipation of a tourist and business travel revival in the fourth quarter this year.
By late October, PAL plans to increase flights to San Francisco, Hong Kong, Los Angeles, Guam, Singapore, Dubai, Doha, Nagoya and Fukuoka while continuing special flights to Auckland, Vietnam and points in Australia.
More flights to Honolulu and Taipei will come online by the last week of November, the airline had said.
On domestic routes, the flag carrier is set to add flight frequencies to Iloilo, Legazpi, Butuan, Puerto Princesa, Bacolod, Dumaguete and Roxas City.
PAL also said its Cebu hub will see additional frequencies between Cebu and Zamboanga, Cagayan de Oro, Bacolod, Butuan and Davao.
