Philippine Airlines emerges from bankruptcy in the United States.

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Philippine Airlines emerges from bankruptcy in the United States.

Philippine Airlines has declared bankruptcy, claiming that a US court has accepted its plan to trim up to $2 billion in debt and raise extra money.

In September, the Philippines’ national carrier filed for bankruptcy in the United States, seeking relief from creditors as it struggled to endure the airline industry’s destruction caused by the coronavirus outbreak.

PAL said in a statement Friday that its court-approved reorganization plan involves a $2 billion debt reduction and increased liquidity of $505 million from its principal shareholder.

It also has the option of raising up to $150 million in new capital from new investors.

“With a reorganized fleet, PAL has streamlined operations and is now better financed for future expansion,” the airline noted.

According to government data, air traffic in the Philippines fell by more than 75% in 2020 as a result of travel restrictions established to combat the coronavirus.

The number of domestic and international passengers dropped from 60 million in 2019 to slightly over 13 million in 2020.

In September, PAL announced that it had canceled over 80,000 flights, losing $2 billion in income and laying off over 2,000 people.

The airline said it will restart regular flights, including to cities in mainland China and Australia, once borders reopen and travel restrictions relax.

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