Philippine Airlines files for bankruptcy

Philippine Airlines announced Saturday that it is filing for bankruptcy in the United States, seeking to cut two billion dollars in debt, at a time when it seeks to continue in an industry that has been exhausted by the coronavirus pandemic.

The national carrier of the Philippines said that filing for bankruptcy will allow it to restructure contracts and reduce debt by at least two billion dollars, while at the same time obtaining 655 million dollars of new capital.

The company will reduce the size of its fleet by 25 percent and renegotiate contracts to reduce rental amounts.

"Philippines will continue its operations as usual while completing the restructuring of our network, fleet and enterprise," the airline's vice president and chief financial officer, Nilo Tadeos Rodriguez, said in a video message.

As part of agreements reached with suppliers, lenders and lessors, Rodriguez said Philippine Airlines will provide $505 million to implement the recovery plan. The amounts will later be converted into airline shares and long-term debt.

It will also get $150 million in debt financing after completing the restructuring process "in a few months," according to Rodriguez.

The volume of Philippine air travel collapsed by 75 percent from nearly 30 million passengers in 2019 to seven million last year due to restrictions imposed to combat the pandemic, Philippine Airlines President Gilbert Santa Maria announced in the same video.

The airline canceled more than 80,000 flights, costing it $2 billion in revenue, and shed 2,300 employees.

The main shareholder injected more than $130 million in urgent liquidity, and non-strategic assets were sold for more than 70 million dollars.

Santa Maria said Philippine Airlines is now operating 21 percent of its pre-pandemic flights, to 70 percent of its regular stops.