PAL carried $2B in debt through four years of losses — the pandemic forced Chapter 11

Philippine Airlines (PAL), Asia's oldest commercial carrier, filed for Chapter 11 bankruptcy in the United States on September 3, 2021. The filing in the Southern District of New York was a pre-arranged restructuring plan backed by lenders and aircraft lessors, with a parallel proceeding under the Philippines' Financial Insolvency and Rehabilitation Act. The airline had been losing money for four consecutive years before the pandemic hit.

The restructuring plan targeted $2 billion in permanent debt reductions. Creditors and lessors approved the plan with 100% of votes. The airline also agreed to cut its fleet by 25%, returning aircraft to lessors and delaying new deliveries scheduled for 2020–2021 to between 2026 and 2030. Majority shareholder Lucio Tan committed $505 million in long-term equity and debt financing, with an additional $150 million available from new investors.

The pandemic had devastated PAL's revenue. Passenger volume collapsed from 30 million in 2019 to 7 million in 2020. The airline posted a record net loss of P73 billion in 2020 and a further P16.56 billion loss in the first half of 2021. PAL had already laid off 2,300 workers in March 2021 and was operating only 21% of its pre-pandemic flights at the time of the filing.

PAL emerged from Chapter 11 on December 31, 2021, just four months after filing. The restructuring reduced the airline's debt burden and allowed it to resume operations. The Philippine government, unlike its counterparts in Malaysia and Thailand, had provided no financial rescue. The airline's survival depended entirely on the bankruptcy process and the continued support of its majority shareholder.