Philippine Airlines (PAL) is working on “a comprehensive restructuring plan” as the struggling carrier increased full-year losses on what it called “the extraordinary impact” of the coronavirus pandemic.
PAL Holdings, the carrier’s parent company, says the restructuring “will enable the airline to emerge financially stronger from the current global crisis.”
“We are confident that the restructuring will allow PAL to strengthen its capital structure, meet stakeholder obligations and position the company for long-term success,” adds the company.
No further details were disclosed in the June 17 filing, although PAL Holdings says PAL management is finalizing the details of the restructuring and will announce them “in due course.”
A presentation accompanying the group’s annual results, published the same day, suggests radical changes: “ [It is an] the opportunity to review our business model, develop a new plan, rationalize our fleet, create a lean organizational structure, simplify processes and maximize the use of digitization.
Last November, PAL Holdings laid off a Nikkei Asia report claiming that he was seeking court protection from creditors and was seeking to raise funds. At the time, he said he was “still studying the best options” for the carrier.
Other subsequent press reports indicated that the carrier was in talks with its lessors over a restructuring, which could include reducing its leased fleet and seeking more favorable leasing terms.
The latest development comes as PAL Holdings reported a net loss of 73 billion pesos ($ 1.5 billion) for the fiscal year ended Dec.31. This compares to the net loss of 9.7 billion pesos he reported the previous year.
Revenue has been hit by the coronavirus pandemic as demand for passenger travel has plummeted. The Philippine government also halted commercial flights for most of March, April and May last year, impacting the carrier’s domestic passenger traffic revenue.
For the year, revenues fell 64% to Ps55 billion, exceeding a 46% reduction in costs, which amounted to Ps81.8 billion.
The company spent cash throughout the year, ending 2020 with cash and cash equivalents of 2.4 billion pesos. This compares to the 15.1 billion pesos he had at the start of the year.
According to PAL Holdings: “The reduction in operations affected liquidity as little cash was generated, debts were falling due, ticket refunds were a record due to numerous cancellations caused by travel restrictions. ”
The measures the group has taken to emerge from the crisis include: leveraging bridge financing and support from its majority shareholder, deferring payments, carrying out a spending reduction program, as well as implementing other relief measures. cost reduction.