Philippine Airlines (PR, Manila Ninoy Aquino International) is asking local courts to recognise its Chapter 11 bankruptcy protection proceedings in the United States, according to the airline's president and chief operating officer Gilbert Santa Maria.
Speaking in a forum, he said the carrier had applied for its Chapter 11 filing to be recognised under the Philippines’ Financial Rehabilitation and Insolvency Act of 2010 or RA 10142, even though most of its investors and creditors were US-based.
As reported earlier, the airline on September 3, 2021, had filed a voluntary petition for relief under Chapter 11 of the US Bankruptcy Code, which will allow it to restructure and reorganise its finances impacted by the COVID-19 crisis. It hopes to exit the process before the end of the year. PAL Holdings, the listed holding company of Philippine Airlines, and PAL Express (2P, Manila Ninoy Aquino International), are not included in the Chapter 11 filing. The airline had lost USD2 billion in revenues after pandemic travel restrictions crippled the airline industry.
On September 17, 2021, it pledged 15 aircraft, replacement engines, and frequent flyer miles as collateral to secure a USD505 million debtor-in-possession (DIP) term loan facility covered by the controlling shareholder, Buona Sorte Holdings Inc. The DIP facility will be paid out in two tranches of USD250 million and USD255 million to help shave off USD2.1 billion of its USD6 billion debt.
The airline recently received permission from the US Bankruptcy Court to draw the first USD20 million from the loan facility and to continue operating.
Santa Maria gave his assurances that the airline would continue to provide repatriation flights while in bankruptcy protection. “We continue to fly vaccines, we fly repatriations of overseas workers stuck outside the country. But the most important contribution to the economy is to link our islands, and to link our islands to the world,” he said.
