Philippine Airlines– controlled by billionaire Lucio Tan – seeks to raise $ 505 million through loans and a convertible bond issue as the loss-making company continues to discuss restructuring plans with landlords, Cirium reported Friday with reference to three of the landlords.
PAL is negotiating to return some aircraft to landlords as it considers applying for Chapter 11 bankruptcy protection in the United States, Bloomberg reported in May. About 19 landlords have lease agreements with PAL that cover about 49 aircraft, according to Cirium.
“PAL is currently working on a financial restructuring plan that will ensure the flag bearer’s survival and long-term viability,” said a source familiar with the situation. Forbes Asia. “Details will be published at the right time.” Meanwhile, the source stressed that the airline’s operations are continuing.
Airlines are among the hardest hit by the Covid-19 pandemic, as governments around the world introduced lockdown and limited cross-border travel to curb the further spread of the virus. PAL’s parent company PAL Holdings reported a comprehensive loss of 29 billion pesos ($ 606.2 million) in the nine months to September 2020, more than three times the loss recorded in the same period in 2019.
While domestic flights in the Philippines have resumed in the past month, as the country intensifies its vaccination efforts, it will take years before air traffic returns to pre-pandemic levels. The International Air Transport Association estimates that airlines around the world will lose about $ 48 billion this year.
Amid rising losses in the industry, airlines across the region have raised cash to strengthen their balances. Cebu Pacific, controlled by billionaire Lance Gokongwei and his siblings, raised $ 250 million in April from a convertible bond issue, while Malaysian budget company AirAsia plans to raise up to 2.5 billion ringgit ($ 607.4 million) this year through loans and stock sale.
Tan – who emerged as PAL’s controlling shareholder in 1995 when he was appointed chairman – regained control of PAL in 2014 after acquiring San Miguel Corp.’s controlling stake in the airline. With a net worth of $ 3.3 billion, Tan, 86, was ranked as the third largest individual in the Philippines on the world billionaire list, released in April. His business empire spans tobacco, liquor, banking and real estate.