Philippine Airlines files for Chapter 11 bankruptcy in US

Philippine Airlines Inc filed for Chapter 11 bankruptcy in New York with a lender-supported plan that helps the country’s main carrier recover after the pandemic devastated global travel.

The company aims to cut $2 billion in borrowings through a proposed restructuring plan, which needs court approval, it said. Philippine Airlines will also get $505 million in equity and debt financing from its majority shareholder, as well as $150 million of debt financing from new investors. The carrier said it has support agreements from 90% of its lenders.

The restructuring plan will allow the carrier to reduce its fleet capacity by 25%, it said. The “recovery plan” will allow the airline to return at least 20 aircraft, the company’s management said in response to a Bloomberg News query. Philippine Airlines also cut 35% of its workforce early this year.

Chapter 11 lets a company continue to operate while it restructures. The filing on Friday comes after the airline spent months negotiating with its stakeholders. Billionaire owner Lucio Tan called the filing a “major breakthrough” for the carrier. The carrier will also complete a parallel filing for recognition in the Philippines under the insolvency and rehability law, it said in a statement.

Philippine Airlines is the latest international carrier to reorganize in the United States, under U.S. bankruptcy code. By using Chapter 11, the company will subject its reorganization plan to the final decision of a U.S. judge.

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It certainly is sad to see them loose a huge amount this year… Later knowing that they have already sold/returned most of their fleet one of which is the a350 which was sold to Lufthansa in fact the a350 livery in the game RP-C3506 was one of them :(

Actually, Lufthansa will receive 4 Philippine Airlines A350’s. PAL will also returned some B777-300ER’s soon.

Smart financial move by Philippine airlines, won’t benefit their labor force for the meantime but I’m guessing they’ll be recalled for when air travel picks up.

Pretty sad news😔

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