A plane from Philippine Airlines sits pared at the airport in Manila on October 6, 2020.
AP Photo/Aaron Favila
Tycoon Lucio Tan has extended a bridging loan to Philippine Airlines as the country’s flag carrier sank deeper into the red, with a record net loss of 73 billion pesos ($1.5 billion) for full-year 2020.
The funding support from the company’s majority shareholder along with the deferred payments to aircraft lessors, lenders and other suppliers is helping the airline navigate through the challenging business environment brought on by the Covid-19 pandemic, the flag carrier’s parent PAL Holdings said in a filing yesterday to the Philippine Stock Exchange. The company didn’t disclose details of the bridging loan.
PAL, which counts Tan and Japan’s ANA Holdings among its biggest shareholders, also implemented cost-cutting measures that included retrenching some staff. While such measures helped to reduce operating expenses by 46% to 82 billion pesos, the savings didn’t fully offset the 64% decline in revenue to 55 billion pesos, which reflected the extraordinary impact of the pandemic, PAL Holdings said.
Airlines are among the hardest hit by the pandemic as governments around the world imposed lockdowns and restricted cross-border travel to curb the further spread of the virus. The International Air Transport Association estimates airlines around the world will lose about $48 billion this year after incurring about $126 billion in losses last year.
“PAL management and stakeholders are working on the final stages of a comprehensive restructuring plan that will enable the airline to emerge financially stronger from the current global crisis,” PAL Holdings said in a statement. “PAL management will make the necessary disclosures at the proper time, once details are finalized.”
PAL said it has resumed regular flights on most of its pre-pandemic routes, in addition to new all-cargo services and special repatriation flights on multiple routes to North America, the Middle East, Asia and throughout the Philippines. The airline will increase international and domestic flights as the market recovers and travel restrictions are relaxed, it said.
“We are confident that the restructuring will enable PAL to strengthen its capital structure, meet stakeholder obligations and position the company for long-term success,” the company said in a statement. “PAL’s flights and operations will not be affected in any restructuring.”
Tan—who emerged as PAL’s controlling shareholder in 1995 when he was appointed chairman—regained control of PAL in in 2014 after buying San Miguel Corp.’s controlling interest in the airline. With a net worth of $3.3 billion, Tan, 86, was ranked the third-richest individual in the Philippines in the World’s Billionaires List published in April. His business empire spans tobacco, spirits, banking and property.
