Philippine Airlines (PAL) announced on Wednesday that it was working on a plan to restructure its debt and rebound from the coronavirus disease 2019 (Covid-19) pandemic, which continues to expand the air carrier’s losses and to batter the industry worldwide.
In a statement, the Lucio Tan-led flag carrier said its “management and stakeholders continue to work on a comprehensive recovery and restructuring plan that will enable PAL to emerge financially stronger from the current global crisis.”
“We will make the necessary disclosures at the proper time, once details are finalized,” it added. “In the meantime, we continue to gradually increase our flights operated on most of our international and domestic routes in line with market recovery.”
The Department of Finance (DoF) confirmed the plan, saying the air carrier planned to seek court protection from its creditors and enlist the help of state-run banks in restructuring its debt.
“PAL informed the DoF team of [its] plans last week, but gave no details on any assistance they may need from us,” Finance Secretary Carlos Dominguez 3rd told reporters in a Viber message on Wednesday.
The Finance chief earlier assured that the government was ready to support the airline sector, which was greatly affected by the pandemic and the restrictive measures aimed at
curbing its spread.
The government is talking with industry players and is prepared to assist the affected airlines, according to Dominguez.
“[W]hatever assistance we have or…going to provide will [only be a part] of the entire process. The private sector banks have to cough up the majority of [the] assistance,” he said then.
“Because the government is not in a good position to evaluate credit risks, we will rely on the participation of private banks; and we will support their efforts to help revive the industry” but not to the point the government ends “up owning the airlines,” the DoF head added.
PAL’s announcement comes after its listed operator PAL Holdings Inc. told the Philippine Stock Exchange on November 13 that its comprehensive loss grew to P29.03 billion in the first nine months of the year from P7.86 billion in the same period in 2019.
For the third quarter, comprehensive loss rose to over P7 billion from P4.85 billion year-on-year.
Early last month, PAL announced that it would reduce its workforce by up to 35 percent, which translates to more than 2,700 employees, on account of the pandemic’s impact.
“The collapse in travel demand and persistent travel restrictions on most global and domestic routes have made retrenchment inevitable,” PAL said in a statement then.
On Tuesday, the International Air Transport Association (IATA) reported that airline revenues this year would plunge by 60 percent as a result of the pandemic.
“The Covid-19 crisis threatens the survival of the air transport industry,” with 2020 likely to go down in history as its “worst” year ever, it said.
While airlines have been slashing costs by $1 billion a day, grounding fleets and cutting jobs, they are still racking up huge and “unprecedented” losses, it added.
Compared with 2019, this year’s revenues are now expected at around $328 billion, according to IATA, which groups 290 airlines.
WITH A REPORT FROM MAYVELIN U. CARABALLO and AFP