A Philippine Airlines (PAL) plane takes off at the Ninoy Aquino International Airport (NAIA) in ... [+]
PAL Holdings—Philippine Airlines’ parent company which is controlled by billionaire Lucio Tan—has returned to the black in 2021, ending four years of losses after the flag carrier downsized its fleet, retrenched staff and restructured its debts.
The airline, whose losses deepened during the Covid-19 pandemic as governments around the world restricted travel, exited from bankruptcy proceedings in late December after a U.S. court approved its restructuring plan to slash debts by more than $2 billion. As part of the restructuring, Tan injected $505 million in fresh capital into PAL, while the airline streamlined its fleet.
PAL Holdings posted a net profit of 59.1 billion pesos ($1.1 billion) in 2021, compared with a record net loss of 71.8 billion pesos the previous year, bolstered by increased air cargo revenues and a reduction in operating expenses, the company said in a regulatory filing on Wednesday to the Philippine Stock Exchange. It also booked an exceptional gain of 64.4 billion pesos last year from the settlement and condonation of debts as part of the restructuring plan.
Following the debt restructuring exercise, the company said total liabilities have been reduced by 35% to 192.2 billion pesos last year. “The unsecured debts were converted to equity and aircraft lease modification were executed according to the U.S. court’s approval of the restructuring plan,” PAL Holdings said.
Airlines were among the hardest hit by the pandemic in the past two years as governments around the world imposed lockdowns and restricted cross-border travel to curb the spread of Covid-19. The International Air Transport Association estimates airlines around the world will lose another $11.6 billion this year after incurring about $190 billion in losses in the past two years.
With a stronger balance sheet, PAL had last month started expanding passenger and cargo flights in the domestic and international markets to support the airline’s post-pandemic recovery.
“The PAL Group enters 2022 with cautious optimism for a stronger recovery that will enable the restoration of more flights and boost its economic performance overall,” the company said.
Tan, 87, —who emerged as PAL’s controlling shareholder in 1995 when he was appointed chairman—regained control of PAL in 2014 after buying San Miguel Corp.’s controlling interest in the airline. His real-time net worth has fallen to $1.2 billion from $1.9 billion when the list of the Philippines’s 50 Richest was published in September, according to Forbes data. Tan’s business empire also includes tobacco, spirits, banking and property.
