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

Lucio Tan, Philippine Airlines Chairman, addresses the unveiling ceremony of PAL’s Airbus A319-100-100 in 2006.

Philippine Airlines, controlled by Lucio Tan (billionaire), has returned two of its current aircraft to its lessor over the last month. It also deferred delivery of new passenger jets due to continuing losses which significantly stress its liquidity position.
According to PAL Holdings’ filing to the Philippine Stock Exchange, the airline suffered a net loss totaling 16.6 billion pesos ($330.9m) for the six months ending June 30. This is a sharp contrast to its net loss of 20.7billion pesos a year ago. Due to the impact of the pandemic-induced travel restrictions, revenue fell 51% to 18.4 billion pesos.

The statement said that the group’s liquidity became more challenging in 2020-2021 due to the Covid-19 epidemic’s adverse effects on revenue and passenger sales. “The Covid-19 epidemic and the Philippine and foreign government measures have caused disruptions to PAL’s passenger operations. This leads to the temporary suspension of operations for its domestic routes and limited international flights.

As the company’s revenue declined, it is now embarking on a restructuring program to ensure its business continuity. According to the company, the total capital deficiency was 86.2 billion pesos by June 31.
PAL secured bridge funding from its major shareholder in advance of the restructuring plan. It has also conducted a retrenchment program, implemented cost-cutting steps, and deferred payment through the forbearance and lenders of lessors and suppliers.
In addition to returning two aircraft in July to lessors, the airline delayed the new planes initially planned last year. It also delayed delivery from 2026 to 2030.

Tan–who was PAL’s controlling shareholder in 1995 after he was named chairman -regained control of PAL in 2014 after San Miguel Corp. purchased the controlling interest in the airline. Tan, 86 years old, has a net worth of over $3.3 million and was named the third richest person in the Philippines by the World’s Billionaires List, published in April. Tan’s business empire covers tobacco, spirit, banking, and real property.

- Advertisement -
Avatar photo
Adam Collins
Adam writes about technology, business and economics. With master's degree in Economics, he's presented six papers in international conferences. As a solivagant in the constant state of fernweh, curiosity is the main weapon in his arsenal.

Latest articles

Related articles