PAL will implement a financial restructuring to stop losses

Philippine Airlines said Wednesday that it is ready to implement another financial restructuring to protect the flag carrier from further bleeding amid the COVID-19 pandemic. “Philippine Airlines management and stakeholders continue to work on a comprehensive recovery and restructuring plan that will allow PAL to emerge financially stronger from the current global crisis,” PAL said. The airline, which came out of court-administered corporate rehab in 2017, did not provide further details. “We will make the necessary disclosures at the appropriate time, once the details are finalized,” he said. A PAL executive said the airline would implement the financial restructuring, but did not reveal how they would proceed with the plan. The airline previously cut its workforce by a third after flight revenue fell by more than 60 percent, resulting in more than P29 billion in losses. In 1998, PAL suspended payment of $ 2.07 billion in debt to creditors after initiating corporate rehabilitation. In 2017, the Securities and Exchange Commission approved PAL’s early exit from the corporate rehab. Meanwhile, PAL said it will continue to gradually increase flights on most domestic and international routes in line with the market recovery. PAL’s parent company PAL Holdings Inc. previously reported a total comprehensive loss of P29.03 billion from January to September, up 269 percent from the loss of P7.86 billion in the same period last year. PHI said the comprehensive loss reached P7 billion in the third quarter, also up from P4.85 billion a year ago. Consolidated revenues in the first nine months fell 61.6 percent to P45.29 billion from P117.85 billion recorded in 2019. “The reduction in revenues was mainly due to the decline in passenger and accessory revenues as a result of flight cancellations as of March 2020 due to COVID-19, ”said PHI. The airline also laid off about 2,700 employees due to travel restrictions and the COVID-19 pandemic. The International Air Transport Association said heavy industry losses were expected to continue into 2021. “Aggressive cost cutting is expected to be combined with increased demand during 2021. [due to the re-opening of borders with testing and/or the widespread availability of a vaccine] to see the industry turn cash positive in the fourth quarter of 2021, which is earlier than previously anticipated, ”said the group of airline operators. “This crisis is devastating and unforgiving. Airlines have cut costs by 45.8 percent, but revenue is down 60.9 percent. The result is that airlines will lose $ 66 for every passenger carried this year, with a total net loss of $ 118.5 billion, ”said Alexandre de Juniac, IATA CEO and CEO. “This loss will be drastically reduced by $ 80 billion in 2021. But the prospect of losing $ 38.7 billion next year is nothing to celebrate. We need the borders to be reopened safely without quarantine so that people can fly again. And since airlines are expected to shed cash until at least the fourth quarter of 2021, there is no time to lose, ”said De Juniac. IATA said that the COVID-19 crisis challenged the industry for its own survival in 2020. “Faced with a revenue drop of half a trillion dollars [from $838 billion in 2019 to $328 billion] airlines cut costs by $ 365 billion [from $795 billion in 2019 to $430 billion in 2020]”Said the group. “The history books will record 2020 as the worst financial year in the industry, without exception. Airlines cut spending by an average of $ 1 billion a day during 2020 and will still rack up record losses. If it weren’t for the $ 173 billion in financial support from governments, we would have seen large-scale bankruptcies, ”de Juniac said.