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Manila, Philippines – (COMMERCIAL THREAD) – Philippine Airlines Inc. (PAL) today announced that it has entered into a series of agreements with substantially all of the Company’s lenders, lessors and suppliers of aircraft and engines, as well as with its majority shareholder , in order to allow the Company to successfully restructure and reorganize its finances to face the COVID-19 crisis and emerge as a leaner and better capitalized airline.
The restructuring plan, which is subject to court approval, provides for more than US $ 2.0 billion in permanent reductions in the balance sheet of existing creditors and allows the airline to consensually contract the capacity of its fleet to 25% and includes US $ 505 million of equity and long-term debt financing from PAL’s majority shareholder and US $ 150 million of additional debt financing from new investors.
As part of the agreements with key stakeholders, the Company voluntarily filed a pre-arranged restructuring request under the United States Chapter 11 process in the Southern District of New York to implement the consensus restructuring plan. PAL will also complete a parallel case for recognition in the Philippines under the Financial Insolvency and Rehabilitation (FRIA) Act of 2010.
PAL will continue to operate flights in the normal course of business in accordance with safety regulations, and the Company expects to continue to meet its current financial obligations throughout this process to employees, customers, government and others. its lessors, lenders, suppliers and other creditors.
“We welcome this major breakthrough, a comprehensive agreement that allows PAL to remain the national airline of the Philippines and the nation’s leading global airline, a company better equipped to execute strategic initiatives and maintain the Philippines’ vital global air links. to the world. We are grateful to our lenders, aviation partners and other creditors for supporting the plan, which enables PAL to weather the unprecedented impact of the global pandemic which has significantly disrupted businesses across all industries, especially aviation, and emerge stronger in the long run, ”said Dr. Lucio C. Tan, President and CEO of PAL.
“Following the recent celebration of our 80e anniversary, we move forward with renewed confidence, as today’s actions allow us to continue serving our customers and the Philippine economy into the future. I would also like to recognize the incredible dedication of our teams of employees around the world, who have continued to provide the highest quality of service in these difficult times, ”added Gilbert F. Santa Maria, President and Chief Executive Officer. operation of PAL.
Commercial operations continue as usual during restructuring
PAL is committed to maintaining business continuity throughout the restructuring process – particularly with respect to employees, customers, suppliers, business partners and local communities – and expects to receive the required approvals from the United States Court to facilitate the following:
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PAL continues to gradually increase domestic and international flights in line with the market recovery. In the coming weeks, PAL will increase the frequencies of its flights on major regional and long-haul routes while expanding its national networks from its hubs in Manila and Cebu.
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All passenger and cargo flights will continue to operate, subject to demand and travel restrictions.
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All valid tickets and travel vouchers will be honored.
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PAL reaffirms its commitment to fulfill all reimbursement obligations.
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Mabuhay miles and benefits will be honored.
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Travel benefits valid for retired employees will be honored.
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Outstanding trade suppliers and creditors will be paid in the ordinary course for goods and services provided throughout this process.
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Travel agencies and other business partners will not experience any disruption in their interactions with PAL.
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PAL continues to operate special all-cargo flights to transport vaccines, medical supplies and support critical supply chains.
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PAL continues to work with the Philippine government to organize flights to bring Filipino Overseas Workers (OFW) home after repatriating the majority of Filipinos displaced during the global pandemic.
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PAL continues to innovate and improve the customer experience by working with the government and IATA on streamlined travel rules, including travel passes and vaccine “passports”, while maintaining the highest standards. higher passenger safety levels during this pandemic.
Depositing entities
Philippine Airlines Inc. is the only party included in the Chapter 11 filing; while PAL Holdings Inc., which is listed on the Philippine Stock Exchange (PSE: PHI), and Air Philippines Corporation, known as PAL Express, are not included in the Chapter 11 dossier.
Additional information
Additional resources for clients and other stakeholders, as well as other information on PAL’s cases, can be found by visiting the Company’s restructuring website at www.PALrecovery.com. Court records and other documents related to the Chapter 11 process in the United States are available on a separate website administered by PAL’s claims officer, KCC, at www.kccllc.net/PAL. Information is also available by calling (866) 967-0671 (US / Canada) or (310) 751-2671 (International).
Debevoise & Plimpton LLP, Norton Rose Fulbright US LLP and Angara Abello Concepcion Regala & Cruz (ACCRA) act as legal advisers and Seabury Securities LLC as financial advisor and investment banker to the Company.
About Philippine Airlines
Philippine Airlines, Inc. (PAL) is the national carrier of the Philippines and the country’s only full-service airline. PAL was the first commercial airline in Asia and marked its 80e anniversary in March 2021. The young fleet of Boeing 777, Airbus A350, Airbus A330, Airbus A321 and De Havilland DHC Q400 operates from hubs in Manila, Cebu and Davao to 29 destinations in the Philippines and 32 destinations in Asia and North America, Australia, Europe and the Middle East. PAL was ranked as a 4-star global airline by Skytrax in 2018 and a major 5-star airline by the Association of Airline Passengers (APEX) in 2020, and was also named the world’s most improved airline in the 2019 global survey. Skytrax among passengers with a ranking of 30e best airline in the world.
Corporate Communications Department, 3rd Flr Mezzanine, PNB Financial Center, Diosdado Macapagal Ave., CCP Complex, Pasay City
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