MANILA— A court from the United States has approved the Philippine Airlines' (PAL) restructuring plan as part of its bankruptcy filing, "a critical moment" that could help the airline as it weathers the impact of the pandemic, PAL said on Saturday.

In a statement, PAL said this would allow them to move forward with the Chapter 11 process that they filed in September.

• READ: PAL announces restructuring amid pandemic impact, says flights to continue
• READ: 'Business as usual': PAL says Chapter 11 bankruptcy filing won't affect flights, workers

The move is aimed to "significantly reduce debt, streamline fleet and acquire additional liquidity," the Lucio Tan-led flag carrier said.

“We have a few more procedural steps to take before we can complete the Chapter 11 process, after which we will focus intensely on serving the public, navigating the continuing challenges of the pandemic and economic recovery, and sustaining the links that connect our archipelago," PAL President and COO Gilbert Santa Maria explained.

PAL said they expect their Plan of Reorganization to take place "before the end of 2021." It is currently being supervised by US courts, they said.

The airline earlier said that their restructuring plan would bring down debt by at least $2 billion. This includes implementing a 25-percent reduction in its fleet by returning "several wide-body and narrow-body aircraft."

It also includes $505 million in long-term equity and debt financing from PAL’s majority shareholder and $150 million of additional debt financing from new investors.

"[The plan] improves PAL’s critical operational agreements and includes US$505 million investment in long-term equity and debt financing from PAL’s majority shareholder," the statement read.

The airline also noted that their pandemic recovery plan was "accepted 100 percent" by their lessors, lenders, and equipment maintenance providers.

PAL Holdings earlier said in a disclosure to the stock exchange the Bankruptcy Court authorized PAL to borrow or access the DIP (Debtor-in-possession) loan facility of up to an interim aggregate principal amount of $20 million.

In 2020, PAL Holdings reported a net loss of P73 billion due to the "extraordinary impact" of the COVID-19 pandemic on the operations of Philippine Airines.

• READ: PAL operator incurs P73 billion loss in 2020, airline to undergo restructuring

— Reports from Job Manahan and Jess Fenol, ABS-CBN News

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