Philippine Airlines (PAL) received approval on a final basis from the U.S. Bankruptcy Court for the Southern District of New York to access its debtor-in-possession financing totaling $505 million, a core feature of the flag carrier’s restructuring plan.

“This important step confirms that our recovery process is on track as we continue to work hard on securing a fully consensual reorganization plan in an efficient manner. We want to thank our lenders, aviation partners and other creditors for their high level of support and confidence in the future of PAL. We also appreciate the support of our valued customers as we continue to serve travelers and the Philippine economy,” Gilbert F. Santa Maria, president and chief operating officer of Philippine Airlines, said.

Philippine Airlines’ DIP financing is comprised of a $250 million first lien secured tranche A multi-draw term loan, of which $20 million was drawn following approvals on the “first day” court hearing on Sept. 20, 2020, and a second lien secured tranche B multi-draw term loan facility of $255 million. The DIP financing could be converted (at Philippine Airlines’ discretion) to long-term unsecured debt and equity — rather than repay in cash — upon its emergence from Chapter 11.

“With approval to fully access our DIP financing, PAL has the additional liquidity needed to meet our current and future obligations and to continue operating as usual. PAL will emerge a leaner and more competitive airline thanks to our hardworking employees, the resolute commitment of our majority shareholder and the strong support from our stakeholders and creditors,” Nilo Thaddeus P. Rodriguez, CFO of Philippine Airlines, said. “We’re grateful that the court approved our motions and noted that it was a most efficient Chapter 11 hearing for a case of this complexity.”

In addition to the approval of the DIP financing, the U.S. Bankruptcy Court also approved Philippine Airlines’ various restructuring support agreements with stakeholders, which is the initial step toward confirmation of the consensual Chapter 11 restructuring plan that has the support of substantially all of Philippine Airlines’ primary aircraft lessors and lenders; original equipment manufacturers; maintenance, repair and overhaul service providers; and certain funded debt lenders.

The U.S. Bankruptcy Court also granted other approvals on a final basis, including Philippine Airlines’ motions for customer programs, critical and foreign vendors and employee compensation.

Philippine Airlines will continue to operate flights in the normal course of business in accordance with safety regulations, and the company expects to continue to meet all its current financial obligations throughout the Chapter 11 process to employees, customers and the government as well as to its lessors, lenders, suppliers and other creditors.