Sep. 13—Flag carrier Philippine Airlines (PAL) and its subsidiary owed the government a total of P570 million as of last month, according to the Department of Finance.
Finance Secretary Carlo Dominguez 3rd told reporters over the weekend that PAL owed the Civil Aviation Authority of the Philippines (CAAP) P373 million as of August 31 this year, citing data from Transportation Secretary Arthur Tugade.
Meanwhile, as of the end of August, PAL Express, its wholly owned subsidiary, owed the CAAP P197 million.
Tugade told Dominguez, "We also wish to advise you Sir that moving forward, PAL and PAL Express committed to make current all their obligations to CAAP, incurred from July 2021 onwards."
He added that all debts previous to July 2021 will be subject to reconciliation and immediate payment, with terms to be agreed upon between CAAP and PAL and subject to final board approval.
The said obligations cover billed charges for aero, rental, utilities and check in counter.
A court in the United States granted PAL access to the first $20 million of the $505 million in anticipated finance to support its operations late last week.
PAL has announced that it has filed for bankruptcy in the US to undergo restructuring, which will result in over $2 billion in permanent balance sheet reductions from existing creditors, as well as a 25 percent reduction in fleet capacity.
The restructuring will include $505 million in long-term equity and debt financing from PAL's majority shareholder, as well as $150 million in additional debt financing from new investors.
The company said it has voluntarily filed for a pre-arranged reorganization under the US Chapter 11 process in the Southern District of New York to implement the consensual restructuring plan as part of the agreements with key stakeholders.
Companies file for Chapter 11 bankruptcy protection "facing significant financial difficulties. It provides a restructuring of their debts and creation of a manageable reorganization plan," based on business websites.
PAL added it will file a parallel application in the Philippines for recognition under the Financial Insolvency and Rehabilitation Act of 2010.
"PAL will continue to operate flights in the normal course of business in accordance with safety regulations, and the Company expects to continue to meet its current financial obligations throughout this process to employees, customers, the government, and its lessors, lenders, suppliers, and other creditors," it underscored.
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