PAL shareholders approve capital infusion to aid recovery

Shareholders of PAL Holdings Inc., the parent firm of Philippine Airlines (PAL), have approved a significant capital infusion through a share sale and an enlarged capital base to support the flag carrier amidst its Chapter 11 creditor protection filing.

The company's capital base will be doubled from P13.5 billion to P30 billion, accompanied by the issuance of 10.2 billion shares to be sold privately to Lucio Tan's Buona Sorte Holdings Inc.

This equity infusion is expected to raise P12.75 billion.

In addition to the equity, Buona Sorte Holdings will also provide a separate $250-million five-year term loan to PAL.

The combined debt and equity injection totaling $505 million will serve as working capital for PAL.

This financial support is crucial for PAL's Chapter 11 filing, which aims to eliminate $2.1 billion in aircraft-related debts, restructure the business, and downsize its fleet for sustainable operations.

PAL Holdings slashed losses by 24 percent to P21.83 billion in the first nine months of 2021, after cutting costs, although revenues were still down 30 percent.

As travel restrictions eased in the third quarter, PAL's revenues soared 67 percent to P14.12 billion.