PAL's US$5b debt rehab largest in Philippines history

The total liabilities of Philippine Airlines — including its outstanding obligations to foreign aircraft suppliers — stand at almost US$5b, making its proposed debt restructuring plan the largest in the country’s history. “This [amount] is due to new accounting rules on [aircraft] leases that were implemented in 2019, ” a company insider said, even as he explained that the actual amount of loans excluding these assets was “much smaller than that.” According to company insiders, the flag carrier’s total liabilities are expected to fall to around $3b once its rehabilitation plan is approved by US courts, possibly as soon as next month. “PAL will likely seek US court protection once it has 67% of its creditors or lessors agreeing to its request for restructuring, ” another industry source familiar with the airline’s situation said. “This is to ensure that dissenting creditors follow and don’t throw off the restructuring plan — it’s the usual Chapter 11 filing done by US businesses to ensure business [continuity], ” he added. “It will be filed in the US since 75 per cent of creditors are based there and they have specific courts with knowledgeable judges on restructuring.”<br/>