The Department of Finance (DOF) assured that the national government will to assist local airliners reeling from the prolonged coronavirus pandemic.
Amid mounting financial losses of airlines due to COVID-19 headwinds, Finance Secretary Carlos G. Dominguez III said that two state-run lenders have participated in the financing package extended to the operator of Cebu Pacific and Cebgo.
While for the case of Philippine Airlines (PAL), Dominguez said they are waiting for the flag-carrier’s filing for Chapter 11 bankruptcy protection in the US and its final rehabilitation plan.
Cebu Air Inc. signed last March a P16-billion loan facility with a syndicate of domestic banks, including government financial institutions (GFIs) Land Bank of the Philippines and Development Bank of the Philippines (DBP).
In 2020, Cebu Pacific and PAL reported an aggregate net loss of P95.2 billion. The Lucio Tan-led airline incurred a net comprehensive loss of P73 billion, while the Gokongwei-led budget carrier reported a net loss of P22.2 billion.
“Land Bank and DBP have participated in the investor/private sector led financing package of Cebu Pacific. Our GFI’s are awaiting the outcome of the Chapter 11 filing of PAL in the US as well as their final rehabilitation plan which has yet to be formally submitted,” Dominguez said.
Last month, PAL said the company has “no definite decision at this time” about filing for bankruptcy in the US to get court protection from creditors.
However, the flag carrier also acknowledged that “all options are possible.”
Meanwhile, PAL said its management and stakeholders were working on the final stages of a comprehensive restructuring plan that will enable the airline to emerge financially stronger from the current global crisis.
“We are confident that the restructuring will enable PAL to strengthen its capital structure, meet stakeholder obligations and position the company for long-term success,” the airline said.
The global airline industry bled over P6.1 trillion in the wake of a 65.9 percent decline in airline passenger traffic, the sharpest drop in history, according to the International Air Transport Association (IATA).
Locally, the government halted all commercial flights in April, May and part of March 2020 as part of a nationwide community quarantine, while local and worldwide travel restrictions held airlines down to a limited number of flights for the rest of last year.