The US bankruptcy judge in New York has yet to approve the plan, which provides for a $2 billion debt reduction.
Under its majority shareholder’s plan, Philippine Airlines will receive $505 million in equity and debt financing, as well as $150 million in debt financing from new investors. The company reports that 90 percent of its lenders support the plan, according to Bloomberg.
The restructuring plan allows the airline to reduce its fleet capacity by 25 percent. This means that about twenty aircraft will leave the fleet. Earlier this year, Philippine Airlines already cut 35 percent of its jobs.
The restructuring plan will enable the airline to overcome the unprecedented impact of the corona crisis, CEO Lucio Tan said. In the long term, the plan should strengthen Philippine Airlines’ position.
With this move, Philippine Airlines follows the example of the Latin American airlines Avianca, LATAM and Aeromexico, which already opted for bankruptcy protection in the US last year. The three companies are already well advanced with their reorganisations.
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