Philippine Airlines helped by bankruptcy cuts, but more needed?

Philippine Airlines (PAL) has secured the deals it needs for a relatively quick exit from bankruptcy protection, opening the way for a significant restructuring of its operation. The airline plans to cut back its widebody fleet and long haul network to give itself a better chance of recovery in the post-pandemic market.

PAL filed for Chapter 11 bankruptcy protection in a U.S. court on 3-Sep-2021. The move has been signalled for some time, as the company took several months to negotiate with creditors and investors to present a prearranged bankruptcy for court approval. It is one of a handful of overseas airlines electing to use the U.S. bankruptcy process for reorganisation.

The airline was facing some serious challenges before the pandemic, particularly from strong LCC competitors in its domestic and international markets. It was already planning a turnaround initiative, but like many other airlines in the region it has been forced to take more drastic action.

Its post-bankruptcy headaches will include an uncertain demand recovery timeline and undiminished pressure from LCCs.