How Philippine Airlines Saved Itself From Bankruptcy
Earlier today, in New York City, Philippine Airlines, a PH-based company has filed for bankruptcy protection. But what is Bankruptcy Protection and how is it different from filing bankruptcy? Let’s dive in.
Travel has been heavily restricted these days. This has not only affected major tourism industries, but also the transportation sector. Operating expenses make most of these giant companies require a minimum income consumption, and as of late 2020, this minimum operational cost has not been met.
Airline companies are no exception to this pandemic scenario: a true pandemic in the financial sector. And this will a company to decide its fate; a line between two controversial topics;
Bankruptcy and Bankruptcy protection
Bankruptcy is when a company no longer wishes to continue, whether it is because of impracticality, or because of negligence. Many countries have different chapters in their laws that refer to what things that the court requires from a company that files bankruptcy. Examples include confiscating all items owned by the company, including real estate, and other assets that can be sold, to pay off all outstanding loans, employee salaries & benefits, and company penalties.
Bankruptcy Protection (B.P.), on the other hand, is the opposite: it grants the company a protection against bankruptcy. Companies file for B.P. if they believe that they can still somehow recover, with a few changes and restructuring efforts. The court may require the company to submit a contingency plan that is well thought out, and financially stable. Companies like Philippine Air Lines (also known as P.A.L. Holdings) express their positive intentions of keeping the company afloat, and NOT “abandoning ship”.
NOT BAD NEWS
This means that the company still wants to continue its operations, though in a lesser capacity than before. While this is to say, at the very least, a good news, its not going to be totally good for everyone. In fact, a compromise is necessary, so that the business will stay afloat.
In the situation of PAL’s “recovery plan”, this will include cutting down the size of its workforce, laying off employees, and selling a few assets that are unused by their offices, including some aircraft units. This will allow the airline to return at least 20 units, to ease its efforts in budgeting.
FUTURE
What the pandemic has taught us is that, even huge companies may start to fall, but a consistent willpower and teamwork may just be our last hope for any business, relationships, or career that was damaged by economic crisis.
And sometimes, the best thing to do is not to abandon the problem. Instead, its better to continue moving forward because even if the struggle is real, the chance to improve was not abandoned.
