PAL - Philippine Airlines (PR, Manila Ninoy Aquino Int'l) has confirmed to Forbes Asia that it is working on a survival plan based on “financial restructuring” after reports emerged that it was seeking to raise USD505 million through a combination of further loans and a convertible bond issue.

“PAL is currently working on a financial restructuring plan which will ensure the flag carrier’s survival and long-term viability,” a source familiar with the matter told the publication, adding that “details will be disclosed at the appropriate time” and until then the airline’s operations will continue.

Bloomberg Law reported on the possible fundraising last month. Lessors, with whom the loss-making carrier continues to negotiate on returning some of its aircraft, recently told Cirium that they had formed an informal working group ahead of Philippine Airlines’ potential filing for Chapter 11 bankruptcy protection in the US.

According to reports, PAL is considering debtor-in-possession (DIP) financing of USD505 million, broken down into USD250 million in borrowings and USD255 million in convertible debt, which would allow it to raise capital to fund operations while a prepackaged bankruptcy case runs its course. It is is also reportedly mulling exit financing of about USD150 million to help pay creditors’ claims under the restructuring plan.

Philippine Airlines was not immediately available for comment.