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Billionaire Lucio Tan’s Philippine Airlines Returns Planes, Defers New Aircraft Deliveries Amid Losses

By News Creatives Authors , in Billionaires , at August 23, 2021

Philippine Airlines—controlled by billionaire Lucio Tan—has returned two of its existing aircraft to its lessor last month and deferred deliveries of new passenger jets as continuing losses significantly strain the flag carrier’s liquidity position.

The airline posted a net loss of 16.6 billion pesos ($330.9 million) in the six months ended June 30, compared with a net loss of 20.7 billion pesos a year ago, its parent PAL Holdings said Monday in a filing to the Philippine Stock Exchange. Revenue slumped 51% to 18 billion pesos during the period, reflecting the lingering impact of pandemic-induced travel restrictions.

“The group’s liquidity situation became more critical in 2020 and 2021 due to severely weak passenger sales and revenue as an adverse effect of the Covid-19 pandemic,” the company said in a statement. “The Covid-19 outbreak and the measures taken by the Philippine and foreign governments have caused disruptions to PAL’s passenger operations, resulting to temporary suspension and limited operations of its flights both for domestic and international routes.”

To ensure business continuity, the company is embarking on a restructuring plan as the decline in the airline’s revenue has put significant strain on the group’s liquidity position. Total capital deficiency stood at 86.2 billion pesos as of the end of June, it said.

Ahead of the restructuring plan, PAL has drawn on bridge financing from its major shareholder, carried out a retrenchment program, implemented cost-cutting measures and deferred payments through the forbearance of lessors, lenders and suppliers.

Besides returning two aircraft to lessors in July, the airline has delayed the delivery of new planes that were originally scheduled last year and this year to between 2026 and 2030.  

Tan—who emerged as PAL’s controlling shareholder in 1995 when he was appointed chairman—regained control of PAL in in 2014 after buying San Miguel Corp.’s controlling interest in the airline. With a net worth of $3.3 billion, Tan, 86, was ranked the third-richest individual in the Philippines in the World’s Billionaires List published in April. His business empire spans tobacco, spirits, banking and property.


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