The national carrier said للفيلبـين Declaring bankruptcy would allow it to restructure contracts and reduce debt by at least $2 billion, while at the same time obtaining $655 million in new capital.
The company will reduce the size of its fleet by 25% and renegotiate contracts to reduce rental amounts.
“Philippine Airlines will continue its operations as usual while completing the restructuring of our network, fleet and enterprise,” the company’s vice president and chief financial officer, Nilo Tadeos Rodriguez, confirmed in a video message.
As part of agreements reached with suppliers, lenders and lessors, Rodriguez said Philippine Airlines will secure $505 million to implement the recovery plan. The amounts will later be converted into airline shares and long-term debt.
It will also get $150 million in debt financing after completing the restructuring process “in a few months”, according to Rodriguez.
The volume of air travel in the Philippines collapsed 75% from nearly 30 million passengers in 2019 to 7 million last year due to restrictions imposed to combat the pandemic, Philippine Airlines President Gilbert Santa Maria announced in the same video.
The airline canceled more than 80,000 flights, costing it $2 billion in revenue, and shed 2,300 employees.
The main shareholder injected more than 130 million dollars in urgent liquidity, and non-strategic assets were sold for more than 70 million dollars.
Santa Maria said that Philippine Airlines is now operating 21% of its pre-pandemic flights, to 70% of its usual stations.