Magnate Lucio Tan provided a bridging loan Philippine airlines as the country’s national carrier plunged deeper into negative territory, with a record net loss of 73 billion pesos ($ 1.5 billion) for the full year of 2020.
Financial support from the company’s majority shareholder, along with deferred payments to aircraft lessors, lenders and other suppliers, is helping the airline overcome the challenging business environment caused by the Covid-19 pandemic, the parent carrier’s PAL Holdings said in a statement. yesterday on the Philippine Stock Exchange. The company did not disclose details of the bridge loan.
PAL, of which Tan and Japan’s ANA Holdings are the largest shareholders, has also taken cost-cutting measures, including downsizing. While such measures helped reduce operating expenses by 46% to 82 billion pesos, the savings did not fully offset the 64 percent drop in revenues to 55 billion pesos, which reflected the extreme impact of the pandemic, PAL Holdings reported.
Airlines have been hit hardest by the pandemic as governments around the world have imposed lockdowns and restricted cross-border travel to curb the further spread of the virus. The International Air Transport Association estimates that airlines around the world will lose about $ 48 billion this year after suffering losses of about $ 126 billion 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. “The PAL management will provide the necessary information in due course, as soon as the details are clarified.”
PAL said it has resumed scheduled flights on most of its pre-pandemic routes, in addition to new cargo and special repatriation flights on multiple routes to North America, the Middle East, Asia and the Philippines. The airline will increase the number of international and domestic flights as the market recovers and travel restrictions ease, it said.
“We are confident that the restructuring will enable PAL to strengthen its capital structure, fulfill its commitments to stakeholders and position the company for long-term success,” the company said in a statement. “No restructuring will affect PAL flights and operations.”
Tan, who became PAL’s majority shareholder in 1995 when he was named chairman of the board of directors, regained control of PAL in 2014 after purchasing a majority stake in San Miguel Corp. Tang, 86, with a fortune of $ 3.3 billion, ranked third in the ranking of the richest people in the Philippines in List of billionaires of the world published in April. His business empire spans tobacco, spirits, banking and property.