Tycoon Lucio Tan’s Philippine Airlines Seeks To Raise $505 Million Amid Ongoing Talks With…

Philippine Airlines—controlled by billionaire Lucio Tan—is seeking to raise $505 million through borrowings and a convertible bond issue as the loss-making carrier continues to discuss restructuring plans with lessors, Cirium reported on Friday, citing three of the lessors.

PAL is negotiating returning some planes to lessors as it considers filing for Chapter 11 bankruptcy protection in the U.S., Bloomberg reported in May. About 19 lessors have lease agreements with PAL covering about 49 aircraft, according to Cirium.

“PAL is currently working on a financial restructuring plan which will ensure the flag carrier’s survival and long-term viability,” a source familiar with the situation told Forbes Asia. “Details will be disclosed at the appropriate time.” In the meantime, the source stressed that the airline’s operations continues.

Airlines are among the hardest hit by the Covid-19 pandemic as governments around the world imposed lockdowns and restricted cross-border travel to curb the further spread of the virus. PAL’s parent PAL Holdings reported a comprehensive loss of 29 billion pesos ($606.2 million) in the nine months to September 2020, more than three times the loss recorded in the same period of 2019.

While domestic air travel in the Philippines has resumed in recent month as the country steps up vaccination efforts, it will take years before air traffic returns to pre-pandemic levels. The International Air Transport Association estimates airlines around the world will lose about $48 billion this year.

Amid mounting industry losses, airlines across the region have been raising cash to bolster their balance sheets. Cebu Pacific, controlled by billionaire Lance Gokongwei and his siblings, raised $250 million in April from a convertible bond issues, while Malaysian budget carrier AirAsia plans to raise up to 2.5 billion ringgit ($607.4 million) this year through borrowings and share sales.

Tan—who emerged as PAL’s controlling shareholder in 1995 when he was appointed chairman—regained control of PAL in in 2014 after buying San Miguel Corp.’s controlling interest in the airline. With a net worth of $3.3 billion, Tan, 86, was ranked the third-richest individual in the Philippines in the World’s Billionaires List published in April. His business empire spans tobacco, spirits, banking and property.