US court okays Philippine Airlines’ restructuring plan

The US Bankruptcy Court for the Southern District of New York has approved Philippine Airlines’ Chapter 11 restructuring plan after it secured total approval from creditors during a vote on December 17.

“We have a few more procedural steps to take before we can complete the Chapter 11 process, after which we will focus intensely on serving the public, navigating the continuing challenges of the pandemic and economic recovery, and sustaining the links that connect our archipelago,” Gilbert F. Santa Maria, PAL President & Chief Operating Officer, said in a statement.

The Filipino flag carrier was able to secure a 25% reduction in fleet size and USD2 billion in balance sheet reductions from creditors which included primary aircraft lessors and lenders (Asia United Banking Corporation, Union Bank, and the Manila branch of the Industrial and Commercial Bank of China), manufacturers including Airbus, Rolls-Royce, and International Aero Engines, MRO providers, and certain funded debt lenders.

Buona Sorte Holdings Inc. (BSHI), an investment holding company owned by billionaire Lucio Tan, has agreed to inject over USD500 million into the airline and its affiliates of which USD253 million will go directly into the airline while a USD250 million five-year loan will go to Philippine Airlines Inc. (PAI), of which PAL Holdings owns 99%.

The plan is due to come into effect by the end of the year.