Philippine Airlines Emerges from Chapter 11 with $2B in Balance Sheet Reductions



Philippine Airlines emerged from its voluntary Chapter 11 proceedings, completing its financial restructuring within four months.

Philippine Airlines’ plan of reorganization, which was approved by a U.S. court on Dec. 17, 2021, provides for more than $2 billion in permanent balance sheet reductions from existing creditors, improvements in Philippine Airlines’ operational agreements and additional liquidity, including a $505 million investment in long-term equity and debt financing from Philippine Airlines’ majority shareholder.

The airline’s consensual restructuring plan was accepted by 100% of the votes cast by its primary aircraft lessors and lenders; original equipment manufacturers; maintenance, repair and overhaul service providers; and certain funded debt lenders.

“Philippine Airlines stands ready to help grow back the Philippines’ local and international air travel markets in ways that renew the tourism industry; serve the needs of global citizens, including overseas Filipinos; and contribute actively to the recovery of the Philippine economy,” said Philippine Airlines director Lucio C. Tan III, quoting Philippine Airlines chairman and CEO Dr. Lucio C. Tan. “Our mission as the flag carrier matters more than ever, and we are thankful for the chance to rebound from the pandemic and continue to fulfill this mission as best as we can.”

“This is a celebratory moment for PAL, for all our partners and stakeholders and for our personnel who sacrificed much while working successfully to keep the airline flying,” Gilbert F. Santa Maria, president and chief operating officer of Philippine Airlines, said. “Above all, we thank our customers for their support and the Filipino people for keeping faith in their flag carrier through the entire restructuring process. There are immense challenges ahead, but we look forward to tackling them as a reinvigorated Philippine Airlines better positioned for strategic growth to continue serving our customers.”

Under the newly effective recovery plan, Philippine Airlines has the option to obtain up to $150 million in additional financing from new investors.

Philippine Airlines has cleared more than 99% of past refunds and is now back to normal processing times for refunds, except for some 2020 cases that require validation procedures mostly involving third party providers.

Philippine Airlines was the only party included in the Chapter 11 filing, while PAL Holdings, which is listed on the Philippine Stock Exchange, and Air Philippines Corporation, known as PAL Express, were not included in the Chapter 11 filing.

Debevoise & Plimpton, Norton Rose Fulbright and Angara Abello Concepcion Regala & Cruz acted as legal advisors and Seabury Securities acted as financial advisor and investment banker to Philippine Airlines during the Chapter 11 process.

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