Philippine Airlines, the Philippine's flag carrier, plans to return 22 Airbus and Boeing jets to lessors as part of the financial and corporate restructuring. The airline, operated by PAL Holdings Inc., filed for Chapter 11 bankruptcy protection in the U.S. as it continues to struggle from the global decline in travel demand because of the coronavirus pandemic.
Philippine Airlines President Gilbert Santa Maria said Monday that the company would be returning 22 aircraft to lessors as it does not think travel demand would return to pre-pandemic levels in the short term.
He told a news conference that the company expects demand to get back to normal sometime in 2024 or 2025. The move will reduce the airline's fleet of aircraft from 92 to 70 jets.
The company's chief financial officer, Nilo Thaddeus Rodriguez, said they are currently negotiating with Airbus for the postponement of a previous order of 13 narrow-body jets. He said the company is trying to secure an option to cancel orders beyond 2026 to 2030.
The company had assured the public that they will be doing everything they can to emerge from bankruptcy. Santa Maria said the company is now developing a comprehensive financial restructuring plan. He added that the chance of it failing is "very small."
Philippine Airlines plans to cut its debt by up to $2 billion as part of its rehabilitation plan. This also includes $505 million in long-term debt-equity and debt financing from its shareholders, including its major shareholder PAL Holdings, and $150 million additional financings from other investors. PAL Holdings is partly owned by ANA Holdings.
Like other major airlines, Philippine Airlines had been forced to suspend flights, lay off employees, and take on additional debt because of the pandemic. However, Philippine Airlines' troubles do predate the pandemic. Since the first quarter of 2017, the company has been reported losses. In 2020, the company reported a record $1.4 billion loss.
While it implements its restructuring plan and works through its bankruptcy, Philippine Airlines will continue to operate its cargo and passenger flights. The company's restructuring plan is still subject to a decision by a U.S. judge.
