Lucio Tan infuses P15-B safety net to avert PAL bankruptcy

Flag carrier Philippine Airlines (PAL) is hanging on for now, as a P15-billion equity infusion from its owner Lucio Tan provided a safety net from bankruptcy.

According to PAL president Gilbert Santa Maria, Tan provided P15 billion or half of the P30-billion equity infusion which the company has received as advances, prior to the approval of the corporate regulator.

"Well, without that liquidity, Philippine Airlines would probably be not here anymore," he said in an interview on ANC on Thursday.

Santa Maria said shareholders of the company in February also approved an injection of $600 million dollars, as the company continues to incur losses due to travel restrictions brought about by the coronavirus disease (COVID-19) pandemic.

"About half of that has already been completed so we are not in immediate danger of bankruptcy but as this crisis continues, for every month the crisis has lapsed, has passed, we've lost over $300 million in revenue every single month," he said.

"As everybody in the world can see, the airlines are down and grounded mainly because there is no demand, because we are all complying with government requirements to prevent the spread of the virus," he said.

Before the COVID-19 pandemic, PAL Holdings Inc. already posted a net loss of P10.31 billion in 2019, marking the third consecutive year of losses.

Moving forward, PAL said its operations will depend on the recovery of demand post-COVID-19, and more business mitigation measures may be rolled out.

"For example, if we find out that we're going to need to return say 10 to 20% of the aircraft because the demand just isn't there so we don't have to pay rents, we'll return the aircraft," said Santa Maria.

"That means we're going to have to reduce our flight crews and our cabin crews by a similar amount because we'll have fewer aircraft, we'll need fewer of them, and so on so forth," he explained.

The carrier in February already laid off 300 workers as part of a business restructuring plan to manage losses sustained from travel restrictions.

"We're preparing to take action at this point as I've told the employees nobody has any job guarantees. The only people who can guarantee our positions is the Filipino passenger who continue to be willing to fly Philippine Airlines," Santa Maria said.

He noted, however, that "at this point in time it would be extremely inhuman of us to drop our employees on the streets while a pandemic is raging."

PAL, along with other carriers Cebu Pacific and AirAsia, has appealed for the government to provide P8.6 billion in assistance to the airline industry given such losses.

"As long as we can fly and we can survive, then that's an obligation we will be willing and eager to pay back," said Santa Maria.

Santa Maria said that once the modified enhanced community quarantine (MECQ) is lifted at the end of the month, PAL will look at restarting select flights at a limited capacity -- international flights at 5-10% of normal capacity, and domestic flights at 20-30% of normal capacity. —LDF, GMA News