PAL To Get Capital Infusion Debt Float Of $150 Million

Flag carrier Philippine Airlines (PAL) said Saturday that it will file a parallel bankruptcy filing in the Philippines under the Financial Insolvency and Rehabilitation Act of 2010 even as it assured the restructuring program will not affect its passengers and employees.

Photo Insert: The airline will not be getting its wings clipped anytime soon and will maintain normal operations despite the financial turbulence.

The airline has voluntarily filed for a pre-arranged restructuring under the US Chapter 11 process in the Southern District of New York to implement a financial restructuring plan that allows a company to stay in business as it restructures its obligations.

PAL's Chapter 11 filing, which requires a US court approval, would allow for over USD2 billion payment reductions and other changes from the majority of lessors, lenders, and other creditors.

At least USD505 million infusion via equity and debt will come from its majority shareholder.

PAL has arranged for USD150 million of additional debt financing from global private investors to facilitate post-restructuring activities.

The trade creditors and suppliers are expected to be unimpaired by the restructuring plan, PAL said, adding that passengers and employees will also be unaffected by the restructuring.

"PAL will continue to operate flights in the normal course of business in accordance with safety regulations, and the company expects to continue to meet its current financial obligations throughout this process to employees, customers, the government, and its lessors, lenders, suppliers, and other creditors," the statement read.

As the carrier awaits the US court's approval of its plea, PAL will continue to gradually increase its domestic and international flight operations.

It plans to build up flight frequencies on key regional and long-haul routes, and also expand domestic networks from its hubs in Manila and Cebu.

Passengers' valid tickets and vouchers, "Mabuhay miles" and benefits will still be honored, PAL said, while also reaffirming to fulfill refund obligations.

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