The parent company of Philippine Airlines (PAL) reported a net loss of P73 billion in 2020, significantly higher than previous year’s net loss of P10.2 billion as operations were severely affected by the worldwide travel restrictions due to the pandemic.
To recover from severe losses, PAL management and stakeholders are working on the final stages of a comprehensive restructuring plan that will enable the airline to emerge financially stronger from the current global crisis.
In a regulatory filing, PAL Holdings Inc. said the company reduced expenses by 46 percent last year versus 2019, but this was offset by a 64- percent decline in revenues, to P55.3 billion from P155 billion in 2019. This was mainly due to the drop in passenger and ancillary revenues as a result of flight cancellations starting March 2020.
“We are confident the restructuring will enable PAL to strengthen its capital structure, meet stakeholder obligations and position the company for long-term success.” PAL said.
A comprehensive restructuring involves the implementation of a manpower reduction program, decreasing the workforce by 30 percent has already completed by PAL last year.
“Initiatives are in place to optimize the use of available resources and maximize savings on operational costs. PAL will further explore business opportunities to improve sales and increase revenues,” the airline said.
PAL has also drawn on bridge funding and support from its majority shareholder; deferred payments through the forbearance of lessors, lenders and suppliers; carried out a retrenchment program; and implemented cost-cutting measures.
PAL’s flights and operations will not be affected in any restructuring.
“We will increase our international and domestic flights as the market recovers with easing of travel restrictions,” the airline added.
Sought for comment, Finance Secretary Carlos Dominguez said government financial institutions are awaiting the outcome of the Chapter 11 filing of PAL in the US as well as their final rehabilitation plan which has yet to be formally submitted.
It was reported that PAL’s filing of Chapter 11 bankruptcy protection in the US will likely push through this month, but details have yet to be formally announced.
For 2021, PAL has increased its regular flights on most of its pre-pandemic routes, in
addition to new all-cargo services and special repatriation flights on multiple routes to
North America, the Middle East, Asia and throughout the Philippines.
PAL also reported comprehensive net loss of P9.6 billion in January to March this year lower than P10.7 billion losses reported in the same period last year. Consolidated revenues for the first three months of 2021 amounted to P8.3 billion, 74 percent lower than the P32.07 billion recognized in 2020.
The government halted all commercial flights in April, May and part of March 2020 as part of a nationwide community quarantine, while local and worldwide travel restrictions held airlines down to a limited number of flights for the rest of 2020.
