I do understand that given the situation we’re all in, we have to be creative. But, no matter how I think of it, I can’t get enough of the news update about the flag-carrier going into food delivery.
Sometime last month, Philippine Airlines (PAL) introduced its online food shop delivery, offering its legendary arroz caldo served in the Mabuhay Lounge and to business class passengers in long-haul flights like to San Francisco and Los Angeles, via its Instagram Fly PAL Cafe. For P690, the package contains a bowl of porridge good for 2-3 persons, signature toppings like salted egg, garlic and calamansi, as well as 2 pairs of wooden spoons and bowls.
This is not to say that PAL is in dire straits, its financial carnage largely on the account of the COVID-19 pandemic, which has caused unbridled turbulence in the operations of the aviation industry, globally. For now, it operates less than a third of its frequencies/flights per week.
In fact, PAL continues to be imaginative. A very ingenious way of reminding the public that it is here to stay to service the travel requirements of the public, then, now and beyond pandemic.
At this time, or maybe it's close to finish, the management of the flag carrier is wrapping loose ends, finalizing the documents needed before it could finally file for Chapter 11 protection before a New York court.
While PAL has the option to file bankruptcy here in the country, it opted instead to do it in New York to soothe its foreign creditors. Also, jurisprudence on rehabilitation and bankruptcy is available to answer questions that may arise during the process.
There are several concerns PAL management has to address, foremost of which is the reason for going into Chapter 11, the affected parties involved, labor claims, the lessors, the creditors – both local and foreign, and suppliers with total liabilities estimated at $5 billion, and it’s capability to pay.
From what I heard along the business corridor, PAL has no issue regarding labor since the department of labor and employment has already given its stamp of approval for the reduction of its workforce, either through the issuance of pink slip or early retirement scheme.
On its liabilities, debt-to-equity scheme is being considered. A tiering formula will be followed because creditors are not in pari passu, described to be one of the basic principles of insolvency law, although it can be varied by agreement.
Pari passu means "equal in right of payment". The pari passu principle means that all unsecured lenders in insolvency processes such bankruptcy must share equally any available assets of the company or individual, or any proceeds from the sale of any of those assets, in proportion to the debts due to each creditor.
The scheme will be pro-rated depending on the status assigned to the creditors, whether the lender is class A, B or C.
Another important aspect is the stance of the Tan family whether or not to stay as “super majority” owner. This means the Tan group must still own 66 percent in order to control the airline.
The question now is: “Up to what extent the Tan family is willing to be diluted?”
All these concerns should have been satisfied, based on the original timetable at the end last month. Will keep you posted on how the propellers of PAL spin to allow it to fly through this not so friendly sky.
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