Philippine Airlines faced billions in losses during COVID-19 pandemic

Philippine Travel Volumes Collapse by 75 Percent Amid Pandemic Restrictions

Philippine travel volumes collapsed by 75 percent in 2020, falling from about 30 million passengers in 2019 to just seven million as the COVID-19 pandemic grounded commercial aviation, philstar.com reported. The steep drop followed sweeping government restrictions that began in February 2020, when officials canceled all flights to and from mainland China, Hong Kong, and Macau in an effort to contain the virus. By March 2020, the Philippine government imposed a national quarantine and halted all commercial flights, triggering the longest extended grounding of Philippine Airlines (PAL) scheduled services since World War II.

Pandemic Groundings and Severe Revenue Losses

When commercial flights restarted in June 2020, travelers and airlines faced severe entry barriers and regulations imposed by governments worldwide and local government units across the Philippines. PAL canceled tens of thousands of flights, displaced millions of passengers, and lost more than $2 billion in revenue. By March 2020, the carrier was out of cash with almost no revenue, billions of dollars in debt, deeply underwater deliverable fuel hedges, and hundreds of millions of dollars in refund demands.

Emergency Repatriation Missions Across Five Continents

Despite mounting financial pressures, PAL crews flew thousands of repatriation missions to five continents to bring home stranded overseas Filipino workers. The airline operated more than 3,500 repatriation charters to airports throughout the Philippines, carrying more than 300,000 of an estimated 545,000 displaced Filipinos home. PAL also established sweeper flights for stranded foreign nationals, gathering over 17,000 visitors across various islands and transporting them to Manila or Cebu for departure.

Financial Rescue and Restructuring Efforts

In March 2020, PAL faced bankruptcy with cash reserves dwindling to just over $600,000. To prevent collapse, Kapitan injected $50 million of emergency liquidity into the airline. By the time the restructuring was completed in December 2021, total injections reached $133 million, supplemented by another $505 million in Debtor-in-Possession financing to finalize the US Chapter 11 restructuring process.