Philippine Airlines, Inc. (PAL) announced Monday, Oct. 4, 2021, that the U.S. Bankruptcy Court for the Southern District of New York has approved debtor-in-possession (DIP) financing totaling US$505 million.
This will provide the airline the “liquidity needed to meet our current and future obligations and to continue operating as usual,” said Nilo Thaddeus P. Rodriguez, PAL chief financial officer.
The DIP financing is composed of a US$250 million first lien secured Tranche A multi-draw term loan, of which US$20 million was drawn following approvals on the “First Day” court hearing last Sept. 9, and a second lien secured Tranche B multi-draw term loan facility of $255 million.
“This important step confirms that our recovery process is on track as we continue to work hard on securing a fully consensual reorganization plan in an efficient manner,” said Gilbert F. Santa Maria, PAL president and chief operating officer.
The court also granted on a final basis PAL’s motions for customer programs, critical and foreign vendors, employee compensation and authorization to implement the airline’s restructuring support agreements with stakeholders.
PAL, which has incurred massive losses due to the coronavirus disease 2019 (COVID-19) pandemic, announced on Sept. 4, 2021 that it had begun bankruptcy proceedings to be able to stay in business and restructure its obligations.
PAL had also assured that “it is business as usual.” All passenger and cargo flights will continue uninterrupted, subject to demand and travel restrictions. All tickets, vouchers and Mabuhay Miles remain valid.
The airline assured that passengers and employees will not be affected, and that it expects to continue to meet all its current financial obligations throughout the Chapter 11 process to employees, customers, the government, and its lessors, lenders, suppliers, and other creditors.
PAL Holdings Inc., which is listed on the Philippine Stock Exchange (PSE: PHI), and Air Philippines Corp., known as PAL Express, are not included in the Chapter 11 filing. (Ventures Cebu)