Philippine Air exits bankruptcy with option to tap financing

Philippine Airlines Inc. received approval to tap $150 million in additional financing and plans to cut its debt by $2 billion, after winning approval last month from a U.S. court for its reorganization plan.

“There are immense challenges ahead, but we look forward to tackling them as a reinvigorated Philippine Airlines, better positioned for strategic growth to continue serving our customers,” President Gilbert Santa Maria said in an emailed statement Friday.

The flagship carrier, majority owned by billionaire Lucio Tan, is one of several to enter debt restructuring in the U.S.. Aeromexico and Colombia’s Avianca Holdings have both sought court protection in New York.

Philippine Airlines received the go-ahead from the court after its reorganization plan didn’t face any major opposition from debt holders. The airline has the option to obtain up to $150 million in additional financing from new investors, it said in the statement. It had already been given permission to access $505 million worth of equity and debt financing to help it meet obligations.

The global aviation sector has taken a beating as international travel ground to a halt due to Covid-19. The emergence of the omicron virus variant has triggered new border restrictions and business closures, clouding the outlook for recovery.

The Bloomberg World Airlines Index—which consists of stocks of 32 global carriers—is poised for its second straight year of decline, the first such successive run of losses since 2002.