Chapter 13 Property Plant and Equi PDF

COVER SHEET
AUDITED FINANCIAL STATEMENTS
SEC Registration Number

P W – 9 4
COMPANY NAME
P A L H O L D I N G S , I N C .
( A S u b s i d i a r y o f T r u s t m a r k
H o l d i n g s C o r p o r a t i o n )
PRINCIPAL OFFICE ( No. / Street / Barangay / City / Town / Province )
8 t h F l o o r , P N B F i n a n c i a l
C e n t e r , P r e s i d e n t D i o s d a d o
M a c a p a g a l A v e . , C C P C o m p l e x
P a s a y C i t y
Form Type Department requiring the report Secondary License Type, If Applicable
1 7 - A C R M D N / A
COMPANY INFORMATION
Company’s Email Address Company’s Telephone Number Mobile Number
palholdingsinc2015@gmail.com (02) 8816-3451 09278375855
No. of Stockholders Annual Meeting (Month / Day) Fiscal Year (Month / Day)
6,453 as of Dec. 31, 2020 Last Thursday of May 12/31
CONTACT PERSON INFORMATION

The designated contact person MUST be an Officer of the Corporation
Name of Contact Person Email Address Telephone Number/s Mobile Number
Susan T. Lee susan.lee@tanduay.com (02) 8869-8336 N/A
CONTACT PERSON’s ADDRESS
7/F Allied Bank Center, 6754 Ayala Avenue, Makati City
NOTE 1 : In case of death, resignation or cessation of office of the officer designated as contact person, such incident shall be reported to the Commission
within thirty (30) calendar days from the occurrence thereof with information and complete contact details of the new contact person designated.
2 : All Boxes must be properly and completely filled-up. Failure to do so shall cause the delay in updating the corporation’s records with the Commission
and/or non-receipt of Notice of Deficiencies. Further, non-receipt of Notice of Deficiencies shall not excuse the corporation from liability for its
deficiencies.
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SECURITIES AND EXCHANGE COMMISSION
SEC FORM 17-A

ANNUAL REPORT PURSUANT TO SECTION 17
OF THE SECURITIES REGULATION CODE AND SECTION 141
OF THE CORPORATION CODE OF THE PHILIPPINES
1. For the calendar year ended December 31, 2020
2. SEC Identification Number PW- 94
3. BIR Tax Identification No. 000-707-922-000
4. Exact name of registration as specified in its charter PAL Holdings, Inc.
5. Philippines 6.
(SEC Use Only)
(Province, country or other jurisdiction of Industry Classification Code:
incorporation or organization)
7. 8th Floor, PNB Financial Center, President Diosdado Macapagal Ave., 1300
CCP Complex, Pasay City
Address of principal office Postal Code
8. (632) 8816-3451
Registrant’s telephone number, including area code
9. Not Applicable
Former name, former address, former fiscal year, if changed since last report
10. Securities registered pursuant to Section 8 and 12 of the SRC
Number of Shares of Common Stock

Title of Each Class Outstanding and Amount of Debt Outstanding
Common Stock 11,610,978,242 shares
11. Are any or all of these securities listed on the Philippine Stock Exchange?
Yes [ ✓ ] No [ ]
Philippine Stock Exchange Common Stock – 10,502,320,021 shares
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12. Check whether the registrant:
(a) has filed all reports to be filed by Section 17 of the SRC and SRC Rule 17.1 thereunder
or Section 11 of the Revised Securities Act (RSA) and RSA Rule 11 (a)-1 thereunder,
and Sections 26 and 141 of the Corporation Code of the Philippines during the
preceding 12 months (or for such shorter period that the registrant was required to file
such reports);
Yes [ ü ] No [ ]
(b) has been subject to such filing requirements for the past 90 days.
Yes [ ü ] No [ ]
13. Aggregate market value of the voting stock held by non-affiliates:

P
=15.08 Billion as of December 31, 2020
14. Check whether the issuer has filed all documents and reports required to be filed by Section 17 of
the Code subsequent to the distribution of securities under a plan confirmed by a court or the
commission. Not Applicable
Yes [ ] No [ ]
DOCUMENTS INCORPORATED BY REFERENCE
15. Briefly describe documents incorporated by reference and identify the part of the SEC Form 17-A
into which the document is incorporated:
(a) Any annual report to security holders

Reissued 2020 Audited Consolidated Financial Statements of PAL Holdings, Inc. and
Subsidiaries (Incorporated as reference for items 1 and 7 of SEC Form 17-A)
(b) Any information statement filed pursuant to SRC Rule 20

Not Applicable
(c) Any prospectus filed pursuant to SRC Rule 8.1

Not Applicable
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TABLE OF CONTENTS
Page No.
PART I - BUSINESS AND GENERAL INFORMATION
Item 1. Business 5
Item 2. Properties 19
Item 3. Legal Proceedings 21
Item 4. Submission of Matters to a Vote of Security Holders 23
PART II - OPERATIONAL AND FINANCIAL INFORMATION
Item 5. Market for Registrant’s Common Equity and Related Stockholder

Matters 23
Item 6. Management's Discussion and Analysis 24
Item 7. Financial Statements 36
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure 36
PART III - CONTROL AND COMPENSATION INFORMATION
Item 9. Directors and Executive Officers of the Registrant 36

Item 10. Executive Compensation 40
Item 11. Security Ownership of Certain Beneficial Owners and Management 41
Item 12. Certain Relationships and Related Transactions 42
PART IV - CORPORATE GOVERNANCE AND SUSTAINABILITY REPORT
Item 13. Corporate Governance 42

Item 14. Sustainability Report 43
PART V- EXHIBITS AND SCHEDULES
Item 15. Exhibits and Reports on SEC Form 17-C 43
SIGNATURES 44
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND

SUPPLEMENTARY SCHEDULES 45
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PART I - BUSINESS AND GENERAL INFORMATION
Item 1. Business
a) Corporate History
PAL Holdings, Inc. (PHI, or the Company) was incorporated on May 10, 1930 as “Baguio Gold
Mining Company”. On September 23, 1996, the Philippine Securities and Exchange Commission
(SEC) approved the change in the Company’s name to “Baguio Gold Holdings Corporation” and
the change in its primary purpose to that of a holding company. On January 19, 2007, the Philippine
SEC approved the change in the Company’s name from Baguio Gold Holdings Corporation to “PAL
Holdings, Inc.”
On August 13, 2007, the Company acquired directly from the Six Holding Companies
8,823,640,223 shares in Philippine Airlines, Inc. (PAL, or the Airline), which is equivalent to
81.57% of the issued and outstanding common shares in the Airline. At the same time, it acquired
from the Six Holding Companies except Maxell Holdings Corporation 50,591,155 shares in PR
Holdings, Inc. (PR), equivalent to 82.33% of the outstanding shares in PR. Both acquisitions were
made by way of dacion en pago, whereby the total acquisition price of P =12.55 billion for the shares
in PAL and PR was satisfied by an equivalent reduction of the liability owing to the Company from
the Six Holding Companies.
In April 2012, San Miguel Equity Investments Inc. (SMEII), a wholly owned subsidiary of San
Miguel Corporation, acquired 49% equity interest in Trustmark Holdings Corporation (Trustmark).
Trustmark then owns 97.71% of the Company, which in turn beneficially owns (directly and
indirectly, thru PR) 84.67% of PAL. In May and June 2012, the proceeds from the investment of
SMEII to Trustmark flowed down to PAL with the subscription by Trustmark of 17.00 billion shares
in the Company for P =17.00 billion and subsequently, the subscription by the Company of 85 billion
shares in PAL for P=17.00 billion.
On June 26 and September 28, 2012, the BOD, by majority vote, and the stockholders representing
at least 2/3 of the outstanding capital stock, approved the increase in authorized capital stock from
=20.0 billion divided into 20.00 billion shares with P
P =1 par value per share to P
=23.00 billion divided
into 23.00 billion shares with P=1 par value per share. Out of the increase in the authorized capital
stock, P=2.42 billion have been subscribed and fully paid by way of cash infusion by Trustmark.
Accordingly, as a result of the infusion, Trustmark’s ownership in the Company increased from
97.71% to 99.45%. The increase in authorized capital stock was approved by the Philippine SEC on
December 12, 2012.
On February 4 and March 15, 2013, the BOD, by majority vote, and the stockholders representing
at least 2/3 of the outstanding capital stock, approved the increase in authorized capital stock from
=23.00 billion divided into 23.00 billion shares with P
P =1 par value per share to P
=30.00 billion divided
into 30.00 billion shares with P=1 par value per share. The increase in authorized capital stock was
approved by the Philippine SEC on June 28, 2013. Out of the increase in the authorized capital
stock, P=2.42 billion have been subscribed, of which P =603.75 million have been fully paid as of
December 31, 2015. As a result of the additional issuance of shares, Trustmark’s ownership in the
Company decreased from 99.45% to 89.78%.
On February 4, 2013, the BOD, pursuant to the authority duly delegated to it by the stockholders on
April 30, 1973, approved the Company’s change in accounting period from fiscal year ending March
31 to calendar year ending December 31. The Amended By-Laws in connection with the change in
accounting period was approved by the Philippine SEC on July 5, 2013. On October 31, 2013, the
Bureau of Internal Revenue (BIR) approved the request for change in accounting period.
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In October 2014, Buona Sorte Holdings, Inc. (BSHI) and Horizon Global Investments Limited
(HGIL) acquired 9% and 40%, respectively, the 49% stake of SMEII in Trustmark. As of
December 31, 2020 and 2019, Trustmark is 60% owned by BSHI and 40% owned by HGIL. BSHI
and Trustmark were likewise incorporated in the Philippines and are part of the Lucio Tan Group
of Companies while HGIL was incorporated in British Virgin Islands.
On September 26, 2016, the Company’s BOD approved and authorized the acquisition, in a share
swap transaction, of PAL shares from existing PAL shareholders. Relative thereto the BOD likewise
approved the share swap ratio of 5:1 or equivalent to five PAL shares to one PHI share. On
December 27, 2018 and December 18, 2017, the Philippine SEC approved the acquisition of 0.01%
and 0.64% non-controlling interest in PAL, respectively. The Company issued 0.75 million and
123.54 million new shares from its authorized but unissued capital stock in favor of PAL
shareholders who have participated in the PAL share swap transaction. As of December 31, 2020
and 2019, PHI has effective ownership interest in PAL of 98.92%.
On November 28, 2016, the Company’s BOD also approved the acquisition, through share swap
transaction, of the shares of Zuma Holdings Management Corporation (ZUMA), the holding
company of Air Philippines Corporation (APC), from its existing shareholders with a share swap
exchange ratio of 19:1 corresponding to 19 PHI shares to one ZUMA share. On December 21, 2017,
the Philippine SEC approved the acquisition of ZUMA through share swap transaction with its
existing shareholders. The Company issued 840.46 million new shares from its authorized but
unissued capital stock valued at P =5.00 per share in favor of Cosmic Holdings Corporation.
Accordingly, as of December 31, 2020 and 2019, the Company owns 51% of ZUMA.
As a result of the share swap transactions, Trustmark’s ownership in the Company decreased from
89.78% to 86.42% as of December 31, 2018.
In February 2019, ANA Holdings, Inc. (ANA HO), the parent company of All Nippon Airways
(ANA), acquired 1,103,042,933 shares held by Trustmark in PHI equivalent to 9.5% of the current
outstanding shares of PHI. As a result of this transaction, Trustmark’s ownership in the Company
decreased from 86.42% to 76.92% as of December 31, 2020 and 2019.
b) Description of Subsidiaries
Philippine Airlines, Inc.
PAL, a corporation organized and existing under the laws of the Republic of the Philippines, was
incorporated on February 25, 1941. It is the national flag carrier of the Philippines and its principal
activity is to provide air transportation for passengers and cargo within and outside the Philippines.
PAL flies to the most popular domestic jet routes and international and regional points that are either
most visited by Filipinos or provide a good source of visitors to the Philippines. As of December
31, 2020, PAL's route network covered 31 points in the Philippines and 40 international destinations.
All international flights are housed at the NAIA Terminals 1 and 2. Domestic flights are operated
in both NAIA Terminals 2 and 3. For the comfort and convenience to its passengers, transport
services between terminals are regularly provided. PAL also operates both international and
domestic flights in the Cebu International Airport, and in the Clark International Airport in
Pampanga.
PR Holdings, Inc.
PR was organized by a consortium of investors for the purpose of bidding for and acquiring the
shares of stock of PAL in accordance with the single-buyer requirement of the bidding guidelines
set by the seller, the National Government of the Republic of the Philippines. PR acquired on
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March 25, 1992, 67% of the outstanding capital stock of PAL.
PR was partially dissolved or liquidated on November 9, 1998 with a decrease in its authorized
capital stock and retirement of some of its shares in exchange of PAL shares to retiring stockholders
as return of capital.
As a holding company, PR’s primary purpose is to purchase, subscribe, acquire, hold, use, manage,
develop, sell, assign, exchange or dispose of real and personal property, including shares of stocks,
debentures, notes and other securities of any domestic or foreign corporation.
Zuma Holdings and Management Corporation
ZUMA was incorporated and registered with the SEC on August 25, 1989. It was organized
primarily to engage in the business of a holding company. It has an investment in Air Philippines
Corporation (APC), a 99.97%-owned subsidiary. APC is primarily engaged in the business of air
transportation for the carriage of passengers and cargo within and outside the Philippines. APC is
currently doing business under the name and style of Philippine Airlines or PAL Express.
Principal products or services and their markets indicating their relative contributions to sales or
revenues of each product or service:
(i) Percentage of sales or revenues and net income contributed by foreign sales
PAL
The Airline's operating results for 2020 are described as follows:
The events of 2020 have brought an enormous challenge to PAL. First, the eruption of the Taal
Volcano in January, and eventually the outbreak of the coronavirus (COVID-19) that led many
countries to close their borders. The strict implementation of international and local travel
restrictions has significantly decreased the airline’s operations compared to previous year.
Net Revenues by Route
Based on the results of operations for the years ended December 31, 2020, 2019 and 2018, the
comparative revenue contribution by route is shown below:
2020 2019 2018

Transpacific 36.6% 29.5% 27.9%
Europe 2.4% 2.0% 2.7%
Middle East 13.3% 8.6% 9.2%
Asia and Australia 29.6% 38.8% 39.9%
Total International 81.9% 78.9% 79.7%
Total Domestic 18.1% 21.1% 20.3%
Total System 100.0% 100.0% 100.0%
International Passenger Services
As of December 31, 2020, PAL continued to operate international route network to 40 cities in 19
countries.
40 PAL on-line points: Guam, Honolulu, Los Angeles, New York, San Francisco, Toronto,
Vancouver, London, Dubai, Doha, Dammam, Riyadh, Brisbane,
Melbourne, Sydney, Auckland, Port Moresby, Fukuoka, Nagoya,
Osaka, Sapporo, Tokyo, Pusan, Seoul, Hong Kong, Macau, Beijing,
Guangzhou, Shanghai, Quanzhou, Xiamen, Taipei, Bangkok, Kuala
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Lumpur, Phnom Penh, Hanoi, Saigon, Singapore, Jakarta, Denpasar
Bali.
In addition, PAL was able to mount repatriation charter flights to Barbados, Goa, Miami, Milan,
Tunis, Algiers, Jeddah, Lahore, Tashkent, Kuwait, Beirut, Mumbai, Dhaka, and Male in the
Maldives.
Transpacific
When the lockdown was in effect, PAL flew an average of 11 non-stop flights a week to North
America utilizing the B777-300ERs and A350-900s: 4 times weekly to Los Angeles; 2 times
weekly to San Francisco; every Friday to New York; Wednesday and Thursday to Vancouver and
Toronto, respectively.
Direct service to Guam and Honolulu were also operated at least once a week.
The Airline is entitled to fly to other US cities for unlimited frequencies under certain terms and
conditions of the Philippines-US bilateral air transport agreement.
Europe
Though Manila was still under Enhanced Community Quarantine (ECQ), PAL continued its flight
to London with once to thrice frequency every week. Operations were reduced significantly in
December when the new COVID-19 variant was discovered in UK.
Middle East
Operations to Middle East was also in effect despite the ongoing lockdown. DMM and DOH
commenced twice weekly while DXB and RUH flew at least 4 times a week.
Asia and Oceania
China routes were mostly cancelled due to the pandemic. Only HKG and TPE were retained.
HKG flights were implemented at least 3 times a week while TPE commenced once a week.
Some of Japan routes were discontinued such as CEB-KIX, CEB-NGO and CTS. CEB-NRT was
operated at least one a week and FUK twice weekly. HND, KIX and NGO flights were
implemented at least 3 times a week and NRT maintained a four-day operations per week.
In the Southeast Asian region, CEB-BKK and DPS were also cancelled. BKK, CGK and SGN flew
at least once a week. HAN had 2 flights for November and December 2020, while PNH had 2 flights
also in the month of December 2020. KUL flights commenced at least twice a month and SIN had
at least four times a week frequency.
PAL’s Australian operations were limited during the lockdown due to the country’s restrictions.
BNE via SYD flew once in the month of December 2020 and MEL via SYD had two flights during
the same month.
Direct flights to SYD and POM were maintained at least once a month, while AKL once a month
operation commenced only last November and December 2020.
Domestic Passenger Services
PAL's domestic network operations have 31 cities and towns in the Philippines (mostly under
codeshare and operated by partner APC). It served the following domestic destinations: Antique,
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Bacolod, Basco, Butuan, Busuanga, Cagayan, Calbayog, Camiguin, Catarman, Caticlan, Cebu,
Clark, Cotabato, Davao, Dipolog, Dumaguete, General Santos, Iloilo, Kalibo, Laoag, Legazpi,
Manila, Ozamiz, Puerto Princesa, Roxas, San Vicente, Siargao, Tawi-Tawi, Tacloban, Tagbilaran,
and Zamboanga. During the lockdown period, PAL was able to mount sweeper and repatriation
charter flights across its domestic network.
APC
In 2020, APC operated 11,609 round trip flights (11,541 domestic and 68 international) under the
codeshare agreement with PAL.
Traffic revenue amounting to P

=6,559.8 million pertains to billings to PAL in accordance with the
codeshare agreement which is recognized as revenue when the transportation service is rendered.
Joint Services and Code Share Agreements
PAL
Last March 2020, PAL and American Airlines (AA) signed a new Codeshare Agreement. PAL will
codeshare to/from Los Angeles and 8 US domestic points served by American (Atlanta, Denver,
Houston, Las Vegas, Miami, New Orleans, Orlando, and Washington D.C.); American will
codeshare on PAL's flights between Manila and Honolulu, Guam, and Tokyo and between Cebu
and Tokyo. This new agreement is undergoing regulatory review and awaiting approval from the
US Department of Transportation.
PAL renewed and maintained codeshare agreements with our 14 partner airlines: All Nippon
Airways (ANA), Air Macau, Bangkok Airways, Cathay Pacific, China Airlines, Garuda Indonesia,
Gulf Air, Hawaiian Airlines, Malaysia Airlines, Royal Brunei Airlines, Turkish Airlines, Vietnam
Airlines, WestJet and Xiamen Airlines. These arrangements widen PAL's route networks
particularly in Canada, U.S.A, Japan, China, ASEAN, and the Middle East. However, our codeshare
revenues and operations have been challenged in the pandemic due to reduced PAL international
operations and consequential connectivity issues, limited availability of seats and interline
opportunities, government travel restrictions and reduced demand.
In the Philippine domestic sectors, PAL and APC continue to codeshare all flights.
APC
APC codeshares mainly with PAL for the former’s use of the name Philippine Airlines in its
marketing activities and operations. Under the codeshare agreement, PAL markets the codeshare
flights while APC operates the flights. It also has joint services and endorsements of passengers to
PAL during flight interruptions.
APC has an existing Special Re-Accommodation Agreement with Cebu Air, Inc. for the
endorsements of passengers during flight interruptions, effective since October 25, 2011.
Frequent Flyer Programs
The PAL Mabuhay Miles program provides opportunities for travel rewards through the
accumulation of mileage credits earned on flights with PAL and partner airlines. Members also earn
miles through purchases and availment of services from partner establishments including credit
cards, banks, telecommunications, hotels and resorts, tour operators, cruise services, insurance, car
rentals, and other merchandise companies. PAL Mabuhay Miles has a website,
www.mabuhaymiles.com, which provides members access to their account information, and details
on promotions and offers.
The Mabuhay Miles Elite or Premier Elite members enjoy exclusive travel privileges including
priority reservation waitlist, dedicated reservation telephone lines, priority check-in, additional free
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baggage allowance, priority luggage handling, priority airport standby, priority boarding, access to
Mabuhay Lounges and participating VIP lounges, and additional discounts and amenities from
program partners. The Mabuhay Million Milers enjoy the Premier Elite privileges plus other
exclusive benefits for life as a token of appreciation to members who have flown one million
cumulative flight miles.
The SportsPlus Card is a privilege card designed for sports enthusiasts, which grants members the
benefit of extra free baggage allowance for sports equipment.
(ii) Distribution Methods of Products or Services
PAL maintains a total of 10 sales and ticket offices in Manila, 29 in other cities in the
Philippines, and 20 located in foreign stations. There are 33 general sales agents in selected
international points representing the Airline in 95 territories, Billing Settlement Plan subscription
in 70 different countries/territories, 15 domestic sales agents, and 1,047 agents under the domestic
ticketing program, that handle the promotions and sales of PAL’s products and services.
The PAL website, www.philippineairlines.com, has a booking facility which provides interactive
booking of flights and ticket purchases. It also contains additional web pages that feature detailed
descriptions of PAL destinations and a calendar of destination festivities. Functionalities include
fares and tour modules, online training registration, route maps, flight schedules, dropdown lists,
and online cargo booking. Real time flight information of all PAL flights may also be accessed by
logging on to the PAL website.
The PAL mobile app (application software) enables passengers to conveniently book and pay for
their flights, track flight status, and check-in on-line using their mobile services such as smartphones
and tablets.
PAL’s official accounts on the social network sites Facebook, Instagram, and Twitter, are venues
for communicating directly with the customers.
(iii) Status of any Publicly-announced New Product or Service
PAL is strictly implementing Fly Safe “New Normal” practices from ground to inflight. We have
redefined the travel experience by adding extra measures to focus on the passengers’ health and
well-being when flying with us.
Ticket Offices:
• Contact tracing forms (manual or digital)
• Thermal scan, hand sanitizer and footbath upon entering the facility
• Enforced physical distancing
• Installed clear counter barriers
• Staff in protective gears
• Frequent disinfection of high-touch areas such as the counters, clear barriers, seating areas, etc.
Airport:
• Intensified online check-in promotion across all our digital platforms and arrive early at the
airport (at least 3-4 hours prior to departure) to allocate extra time for new safety procedure.
• Passengers are required to bring their own face masks or facial coverings and to always wear
them
• Minimal contact during check-in and boarding
• Installed clear counter barriers
• Hand sanitizers on strategic locations
• Physical distancing with floor and seat markers
• Staff in protective gears
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Inflight:
• Before the flight, intensified cleaning and disinfection of all cabin surfaces inside the aircraft
using high-grade eco-friendly disinfectant is observed
• Our cabin crew undergo medical evaluation prior to their duty and will be wearing full Personal
Protective Equipment (PPE).
• PAL catering service providers strictly follow HACCP and World Food Safety Guidelines in
food preparation and aircraft servicing.
• A modified meal and snack service offered on board, using sealed packaging instead of
traditional meals.
• On cabin air, all PAL aircraft are equipped with high-technology systems and HEPA filters that
trap viruses, bacteria and other contaminants with 99.9% efficiency.
• During every flight, frequent cleaning and disinfection of lavatories and other high-touch areas
are done by cabin crew
PAL’s Business Class offers world class luxury service, with the full-flat seats, state-of-the-art
entertainment, and other privileges in its long-haul Transpacific flights.
The ‘Premium Economy’ class is offered in the domestic and selected international flights. Aside
from the extra spacious seats and specially crafted meal choices; the ‘Premium Economy’ service
includes product offerings such as priority treatment on ground, accrual of miles, increased free
baggage allowance, and flexibility in rebooking, refund, and ticket changes.
Complimentary meals/beverages and in-flight amenities are provided in international and domestic
flights. Special meals may be requested on all international flights to satisfy the dietary requirements
of passengers. Business Class overnight kit is offered in long haul international flights.
The ‘myPAL eSuite’, PAL’s inflight entertainment system which consists of a selection of choice
movies, TV shows, music, games, and informative features can be accessed through the passenger
in-seat video and audio facilities. The ‘myPAL Wi-Fi’ provides on-line internet connection while
onboard. The ‘myPAL Mobile’ allows calls or text messaging using mobile devices. The ‘myPAL
Player’ streams movies, TV shows and music on personal devices such as smartphones or tablets on
select flights.
The Sky Boutique is a selection of duty-free products, luxury brands, and PAL merchandise offered
in all international flights. The service provides the convenience of shopping during the flight.
Economy class passengers can purchase choice seats positioned at the bulkhead and exit rows which
provides the widest legroom or forward seats located in front rows for easy and priority embarkation.
The ‘myPAL Upgrade’ allows ticketed Economy Class passengers to bid for an upgrade to Business
Class or Premium Business Class.
PAL's RHUSH (Rapid Handling of Urgent Shipments) is the airport-to-airport cargo service which
provides the fastest way to ship cargo domestically or overseas. It offers high priority in cargo,
guaranteed space, and quick acceptance and release times.
The PAL Boutique which covers ground, on-board, and on-line selling, offers exclusive PAL
merchandise designed and produced in collaboration with retail icons in the Philippines. The
products sold at special prices include leather goods, apparel, wi-fi service (‘myPAL Roam’), food
items, travel essentials, special souvenirs, and memorabilia items.
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(iv) Competitive business conditions and the registrant’s competitive positions in the industry and
methods of competition
PAL continues to maintain a strong market share in its international routes despite competition with
legacy carriers and growing number of LCCs in the Asia Pacific region. Aside from point-to-point
traffic, these carriers also target beyond passengers via their home countries to their entire network.
The following table shows the Airline’s main competitors and PAL's total market and capacity share
per route.
PAL's Market and Capacity Share:

(January to November 2020)
Market Capacity Airline Competitors

Share Share
Transpacific 48% 48% EVA Airways, Asiana Airlines, Korean Air,
All Nippon Airways, Cathay Pacific, China
Airlines, United Airlines, Delta Airlines, Air
Canada, Qatar Airways
Middle East 31% 31% Cebu Pacific, Emirates, Saudi Arabian

Airlines, Etihad Airways, Qatar Airways,
Kuwait Airways, Oman Air
United Kingdom 31% 33% Emirates, Qatar Airways, Etihad Airways,

Cathay Pacific, Singapore Airlines, KLM
Asia and Australia 27% 29% Legacy Carriers:

All Nippon Airways, Japan Airlines, Delta Air
Lines, Singapore Airlines, Xiamen Airlines,
China Eastern Airlines, Air China, China
Southern Airlines, Cathay Pacific Airways,
Thai Airways, Qantas Airways, EVA Airways,
China Airlines, Korean Air Lines, Asiana
Airlines, Cathay Dragon, Malaysian Airline,
United Airlines, Air Niugini, SilkAir
Low-Cost Carriers:
Cebu Pacific, Jetstar, AirAsia Philippines,
Scoot, Hong Kong Airlines, AirAsia Berhad,
Jin Air, Jeju Air, Air Busan, Pan Pacific
Airlines
Asian carriers such as China Southern, All Nippon Airways, Korean Air, Asiana, and Emirates are
among the world’s biggest in terms of passengers carried. Leading carriers in the Asia and the
Pacific region are China Southern, China Eastern and Korean Air. Most of these international
airlines belong to the largest alliances in the industry (Star Alliance, Sky Team, and One world).
In the domestic market, PAL held a 30% share for the period January to November 2020. The biggest
competitors are the Cebu Pacific group (Cebu Pacific and CebGo) (50%), and Air Asia (20%).
The continuous enhancement of products and services, creativity in fare structuring, and an excellent
safety record enable PAL to hold its place in the market. In the transpacific market, PAL has the
unique advantage of providing the only nonstop service from the Philippines to mainland USA and
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Canada. The nonstop attribute, together with the distinct Filipino flavor of the PAL inflight service,
appeal strongly to Filipino passengers, and cements the PAL edge over the non-Filipino carriers.
Recovery Plans
Philippine Airlines will have a long way to go for recovery. The uncertainty of the situation still
prevails, but news on the availability of COVID-19 vaccine brings hope that passenger traffic will
be better than 2020. The Airline has already started its fleet restructuring to reduce capacity and
match the projected reduced market demand in the short term. PAL will also rationalize its route
network by discontinuing certain ultra-long-haul routes and adjusting frequencies of its overall route
network as compared to 2019 levels. It also plans to densify selected aircraft, to be able to
accommodate the expected increase in passenger demand for certain markets when confidence to
travel resumes resulting to lower costs and improved margins. Flight schedules and timings will also
be enhanced to provide convenience and better connections, to attract more passengers.
A comprehensive restructuring including the implementation of Manpower Reduction Program

decreasing the workforce by 30% has already completed by PAL. Initiatives are in place to optimize
the use of available resources and maximize savings on operational costs. PAL will further explore
business opportunities to improve sales and increase revenues.
The Airlines’ priority remains the same - to provide safe and excellent travel experience to its
customers. It will continue to coordinate with government and private sectors to keep passengers
updated with the latest travel restrictions and requirements. PAL already implemented the Fly Safe
“New Normal” practices and will consistently deliver the quality of service empowered by its
distinct service culture, the ‘Buong Pusong Alaga’ or whole-hearted service, leveraged on its brand
equity ‘the Heart of the Filipino’.
(v) Sources and availability of raw materials and the names of principal suppliers
PAL’s Jet fuel suppliers are: BP Singapore Pte Limited (AirBP), Petron Corporation, Pilipinas Shell
Petroleum Corporation, Chevron Products Company, PT Pertamina (Persero), World Fuel Services
(Singapore) Pte. Ltd., Win Both International Corporation, PTT Oil and Retail Business Co. Ltd.,
China National Aviation Fuel Supply Co., Ltd., Shanghai Pudong International Airport Aviation
Fuel Supply Co. Ltd., Hyundai Oilbank Co. Ltd, S-Oil Corporation, Singapore Petroleum Co. Ltd.,
Sinopec (HK) Aviation Co. Ltd., IP&E Holdings, LLC (dba. IP&E Guam), ENEOS Corporation
formerly JXTG Nippon Oil and Energy Corporation, Safeair Corporation, Modern Consortium for
Refueling Aircraft Co. Ltd. (MCRA), Phoenix Petroleum Philippines, Inc., Unioil Petroleum Phils.,
Inc., Kuwait Petroleum International Aviation Company Limited, Alshams National Global Energy
Company formerly Bakri International Energy Co. Ltd., Idemitsu Kosan Co.,Ltd., Z-Energy
Limited, Island Energy Services Downstream LLC, Quanzhou JinJiang Airport Oil Co., Ltd.,
Cosmo Oil Marketing Co., Ltd., Caltex Australia Petroleum Pty. Ltd., Pacific Energy Aviation
(PNG) Limited, PTT Philippines Trading Corporation and Vitol Asia Pte Ltd.
PAL’s inflight catering requirements are provided by MacroAsia Sats Inflight Service (MSIS), for
domestic flights with business class and premium economy services, and outgoing flights ex- Manila
and for select Manila incoming flights originating from Hong Kong (HKG) and Phnom Penh (PNH),
depending on the type of aircraft utilized. For other incoming flights, the major suppliers include
Flying Food Group (SFO, HNL), HACOR Inc. (LAX), International In-Flight Catering Co. Ltd.
(HNL), LSG Sky Chefs (JFK, AKL, GUM, BKK, PVG, YVR, YYZ), Dnata Catering (SYD, MEL,
BNE,LHR), Air Niugini (POM), Saudi Arabian Airlines Catering (RUH & DMM), Emirates Flight
Catering (DXB), Qatar Aircraft Catering Co. (DOH) Cebu Pacific Catering Services Inc. (CEB),
Fukuoka Inflight Catering (FUK), AAS Catering Services (KIX), Nagoya Air Catering Co. Ltd.
(NGO), Cosmo Enterprise Co. LTD. (NRT & HND), Hotel New Oji (CTS), Korean Air Catering
(ICN and PUS), Beijing Airport Inflight Kitchen Ltd. (PEK), China Pacific Catering Services Ltd.
(HKG, TPE), Xiamen Fliport Catering Ltd. (XMN), SERVAIR Catering Services (MFM), Aerofood
13
ACS (CGK, DPS), SATS Catering Pte. Ltd. (SIN), Brahims SATS Food Services (KUL), Vietnam
Airlines Caterers (SGN), Vietnam Air Catering Services (HAN). For the outgoing international
flight ex-Clark Global Catering (CRK).
(vi) Dependence on one or a few major customers and identify any such major customers
PAL has a large network of customers all over the world and is not dependent on one or a few major
customers.
(vii) Transactions with and/or dependence on related parties
The Company’s significant transactions with related parties are described in detail in Note 18 of the
Notes to Consolidated Financial Statements.
(viii) Patents, trademarks, licenses, franchises, concessions, royalty, agreements or labor

contracts, including duration;
PAL subcontracts the maintenance of its commercial fleet to Lufthansa Technik Philippines (LTP
Manila) for line, base, heavy maintenance and to HAECO (Xiamen, China) & GAMECO
(Guangzhou, China) for heavy maintenance. PAL's Aircraft Engineering Department (AED)
undertakes planning, monitoring and control of all maintenance activities and technical compliance
of aircraft, engines and accessories with airworthiness requirements and industry accepted standards
for safety, reliability, and customer acceptability.
The PAL Fleet is maintained in accordance with the standards and mandated by the aviation
authorities such as:
• Civil Aviation Authority of the Philippines (CAAP),
• US Federal Aviation Authority (US-FAA), and the
• European Aviation Safety Agency (EASA)
PAL complies with the International Civil Aviation Organization (ICAO) requirements and
currently holds IATA Operational Safety Audit (IOSA) certification. The Continuous Airworthiness
Maintenance Program (CAMP) of PAL is approved by the CAAP and is based on Aircraft
Manufacturer’s / Original Equipment Manufacturer’s approved and recommended documents and
Airworthiness Authorities’ mandatory requirements. This ensures that PAL aircraft and equipment
are always in an airworthy condition. AED established the General Maintenance Manual (GMM)
which describes the policies and processes required to achieve the intent of the CAMP, as required
by the CAAP.
PAL subcontracts the maintenance of its aircraft to competent Approved Maintenance Organizations
(AMO) – to LTP for line and base maintenance in the Philippines, HAECO for base maintenance
of the PAL Boeing 777 fleet in Xiamen, China, and GAMECO for base maintenance for several of
its A321 aircraft. Line maintenance in overseas destination stations is subcontracted to CAAP-
approved maintenance organizations such as Cathay Pacific in Haneda and Nagoya, Japan, and
Singapore Airlines Engineering in Los Angeles and San Francisco USA, among many others. LTP
and the outstation service providers are mandated to comply with the requirements of PAL’s
Maintenance Schedule and General Maintenance Manual approved by the CAAP. AED exercises
oversight responsibilities to ensure compliance of the contracted maintenance providers to the
established policies and procedures and contractual obligations.
Man-hour rates for maintenance requirements are negotiated with the respective contracted
maintenance providers in accordance with the terms of the agreement. Maintenance materials and
parts are sourced from approved suppliers (which include original equipment manufacturers such as
Airbus Industries, Boeing, General Electric, CFM International, International Aero Engines (IAE),
Rolls-Royce, among others).
14
Shop maintenance and overhaul services of engines are provided by Lufthansa Technik AG (LHT),
Air France Industries (AFI), IAE, Pratt & Whitney, and Rolls-Royce while the same services for the
Auxiliary Power Units (APUs) are provided by Honeywell. Component pooling and repair services
are handled by HAECO, LHT and Airbus.
Franchise
PAL Franchise
PAL operates under a franchise, which extends up to the year 2034, granted by the Philippine
Government under Presidential Decree No. 1590. As provided for under the franchise, PAL is
subject to:
a. corporate income tax based on net taxable income; or

b. franchise tax of 2% of the gross revenue derived from nontransport, domestic transport and
outgoing international transport operations,
whichever is lower, in lieu of all other taxes, duties, royalties, registration licenses and other fees,
and charges of any kind, nature, or description, imposed, levied, established, assessed, or collected
by any municipal, city, provincial or national authority or government agency, except real property
tax.
APC Franchise
APC operates under a franchise for a term of 25 years from August 8, 1997, the date of effectivity
of Republic Act (RA) No. 8339, with some provisions amended under RA No. 9215 effective
May 5, 2003. As provided for under the franchise, APC is subject to, among others:

b. franchise tax of 5% of the gross revenue derived from non-transport, domestic transport and
whichever is lower, in lieu of all other taxes, duties, fees, and licenses of any kind, nature, or
description, imposed, levied, established, assessed, or collected by any municipal, city, provincial
or national authority or government agency, except real property tax.
As further provided for under PAL’s and APC’s franchises, PAL and APC can carry forward as a
deduction from taxable income, net loss incurred in any year up to five years following the year of
such loss. In addition, the payment of the principal, interest, fees, and other charges on foreign loans
obtained by PAL and APC, and all rentals, interest, fees and other charges paid by PAL and APC to
their lessors for the lease of aircraft, engines, spares, other flight or ground equipment, and other
personal property are exempt from all taxes, including withholding tax, provided that the liability
for the payment of said taxes is assumed by the grantee (PAL or APC, as applicable). Under RA
No. 9337 or the E-VAT Act of 2005 which took effect on November 1, 2005, the franchise tax of
PAL and APC was abolished and PAL and APC became subject to the corporate income tax. PAL
and APC remain exempt from any taxes, duties, royalties, registration license, and other fees and
charges, as may be provided under PAL’s and APC’s franchises
(ix) Need of any government approval of principal products or services
Airline operations are regulated by the Philippine Government through the Civil Aeronautics Board
(CAB) with regard to new routes, tariffs, schedules and passenger rights; through the Civil Aviation
Authority of the Philippines (CAAP), formerly the Philippine Air Transport Office, for aircraft and
operating standards; and through a slot coordinator for airport slots. PAL also conforms to the
standards and requirements set by different foreign civil aviation authorities of countries where the
airline operates. In coordination with the different government air transport agencies - the CAAP
and the Department of Transportation (DOTr) - PAL initiates improvement programs for facilities
15
in the country's domestic and international airports to conform with international standards and
enhance safety of the Airline's operations. In particular, PAL is actively involved in and cooperating
with ongoing efforts by the government to address congestion problems at the Ninoy Aquino
International Airport and further develop the Clark International Airport as an international and
domestic gateway. With respect to passenger rights and protections, PAL assiduously complies with
existing regulations on the matter and continues to cooperate in various efforts to better define and/or
enhance the same.
(x) Effects of existing or probable government regulations on the business
Not Applicable
(xi) Estimate of the amount spent during each of the last three years on research and development
activities, and if applicable the extent to which the cost of such activities are borne directly by
customers;
Not Applicable
(xii) Cost and effects of compliance with environmental laws
PAL has fully complied with the following major environmental laws:
1. Republic Act (RA) 8749, “Philippine Clean Air Act of 1999” and its IRR
Cost for Renewal of Permit to Operate Air Pollution Source Installation - P

=133,800.00
2. Republic Act (RA) 9275, “Philippine Clean Water Act of 2004” and its IRR
Cost for Renewal of Discharge Permit- P=48,295.00

Cost for the operation and maintenance of Sewage Treatment Plant- P
=4,850,000.00
3. Presidential Decree No. 1586, “Establishing an Environmental Impact Assessment System”,

DENR Administrative Order No. 96-37, Presidential Decree 813, Executive Order 927, LLDA
Board Resolution 224 and 408
No cost to PAL for 2020.
4. Republic Act No. 6969 “Toxic Substances and Hazardous and Nuclear Waste Control Act of
1990 and its IRR
Cost for the proper transport, treatment, and disposal of hazardous waste: P
=7,000.00
Cost for application of Permit to Transport: P
=1,500.00
5. Presidential Decree No. 1067, “The Water Code of the Philippines”
Cost for the renewal of Water Permit: P

=5,006.60
6. Republic Act 9003 “The Ecological Waste Management Act of 2000”
Cost for the proper disposal of solid waste: P

=7,718,546.44
7. DENR Administrative Order 2014 – 12 Revised Guidelines for Pollution Control Officer
Accreditation and LLDA Board Resolution 455 series of 2014 (PCO Accreditation and
Training)
16
Cost for the submission of reports- P
=8,200.00
No cost to PAL for 2020 PCO accreditation and trainings.
8. ICAO Annex 16 Vol. 4 - Carbon Offsetting Reduction Scheme for International Aviation
(CORSIA)
Cost for the Verification of Emissions Report submitted to Civil Aviation Authority of the
Philippines (CAAP)- P=172,882.80
The effects of PAL’s compliance with environmental laws are as follows:
1. Improved environmental performance.

2. No incidents that resulted to liability.
3. Attracted new customers and enhanced market share.
4. Improved cost control, good public image, and community relations.
(xiii) Total number of employees and number of full-time employees
The Company has three (3) compensated officers as of December 31, 2020. The Company does not
have any plan of hiring additional employees within the ensuing 12 months.
PAL Employees:
As of December 31, 2020, PAL has a total workforce of 6,238 as follows:
Classification Number of Employees

Ground Employees
Philippine 2,314
Foreign 263
Flight Crew
Pilots 1,004
Cabin Crew 2,657
PAL recognizes two local labor unions, Philippine Airlines Employees’ Association (PALEA) for
the rank-and-file ground employees and Flight Attendants’ and Stewards’ Association of the
Philippines (FASAP) for the cabin crew. In addition, it also recognizes foreign labor unions in the
United States, Singapore and Japan.
PAL has 3,362 union members - PALEA (694), FASAP (2,615), U.S. (11), Singapore (11), and
Japan (31).
On July 5, 2017, a Memorandum of Agreement was entered into by PAL and FASAP which forms
part of the 2015-2020 PAL-FASAP Collective Bargaining Agreement (CBA). Last May 31, 2019,
a new CBA with PALEA was concluded covering the period from October 1, 2018 to September
30, 2023.
Likewise, the CBA for PAL - International Association of Machinists and Aerospace Workers
(IAMAW), which covers employees in the United States, is valid up to June 30, 2019. As agreed,
with U.S. Union, the CBA negotiation will resume after the U.S. Mediation Board has resolved the
petition to include the Sales Representative in the PAL-IAMAW Bargaining Unit. There was an
agreement with the Singapore Manual and Mercantile Workers’ Union (SMMWU) for a new 3-year
CBA from January 1, 2021 to December 31, 2023. For Japan, where an annual re-negotiation for
economic provisions every June is a practice, PAL did not receive any proposal for CBA negotiation
from the PAL-Japan Labor Union.
17
PAL, as always, gives its employees all benefit entitlements in accordance with stipulations in the
respective CBAs.
APC Employees:
As of December 31, 2020, APC has a total workforce of 1,201 as follows:
Classification Number of Employees

Ground Employees
Philippine 558
Flight Crew
Pilots 243
Cabin Crew 400
Major risk/s involved in each of the businesses of the Company and subsidiaries and the
procedures being undertaken to identify, assess and manage such risks.
Investment risk - the Company has financial assets at fair value through other comprehensive income
which has unpredictable market prices.
Price risk - price fluctuations in cost of fuel which is based primarily in the international price of
crude oil. Substantial increases in fuel costs or the unavailability of sufficient quantities of fuel is
harmful to the business.
Regulatory risk - PAL is subject to extensive regulations which may restrict growth or operations
or increase their costs.
Competition - PAL is exposed to increased competition with major international and regional
airlines.
Security and safety risk - the impact of terrorist attacks on the airline industry severely affects the
overall air travel of passengers.
Financial market risk - fluctuations of interest and currency rates.
Economic slowdown - reduces the demand or need for air travel for both business and leisure.
Procedures undertaken to manage risks
- PAL continues to comply with applicable statutes, rules and regulations pertaining to the airline
industry in order to maintain the required foreign and domestic governmental authorizations
needed for their operations.
- Increase in fuel cost and shortage in fuel can sometimes be offset by increase in passenger fares
or the curtailment of some scheduled services.
- Airlines have been required to adopt numerous additional security measures in an effort to
prevent any future terrorist attacks and are required to comply with more rigorous security
guidelines.
- PAL sees to it that it has remain competitive in the areas of pricing, scheduling (frequency and
flight times), on-time performance, frequent flyer programs and other services.
- Proper fund management and monitoring is being done to avoid the adverse effects in the results
of operations of the Group. Cash flows and financial risks are managed to provide adequate
18
liquidity to the Group.
Item 2. Properties
The Company does not own any properties and equipment and has no plans of acquiring any property in
the next 12 months. The Company leases space from an entity under common control. In 2020, the
Company was billed at a monthly rate of P
=34,650.00.
PAL’s properties and equipment include its aircraft fleet, various parcels of land, and buildings.
PAL’s fleet as of December 31, 2020 consists of:
Owned:
Airbus 320-200 9
Bombardier DHC 8-400 3
Bombardier DHC 8-300 4
Under Lease:
Boeing 777-300ER 10
Airbus 350-900 6
Airbus 330-300 15
Airbus 321-231 24
Airbus 321-271N 6
Airbus 321-271NX 2
Airbus 320-200 6
Bombardier DHC 8-400 NG 12
Total 97
There are six (6) A321-231 aircraft, twelve (12) A320-200 aircraft, four (4) Bombardier DHC 8- 300,
and fifteen (15) Bombardier DHC 8-400 aircraft that are leased/subleased to PAL Express with lease
terms ranging from 36 to 144 months.
PAL owns land and buildings located at various domestic and foreign stations.
A. Domestic Properties
1. Bacoor, Cavite 126 sq.m. (house and lot) and 212 sq.m. (parcel of land)
2. Maasin, Iloilo City 3,310 sq.m. and 9,504 sq.m. (parcels of land)
3. Somerset Millennium Makati City 39 sq.m. (condominium unit)
4. Malate 266.40 sq.m.(lot)
5. Ozamiz City 10,000 sq.m. (parcel of land)
6. Quezon City 627.1 sq.m. (parcel of land)
7. Bacolod City 200,042 sq.m. (parcel of land)
8. Mandurriao, Iloilo City 1,300 sq.m. and 1,700 sq.m. (parcels of land)
9. Paranaque City 375 sq.m. (parcel of land)
10. Lapu-Lapu City, Cebu 4,114 sq.m. (parcel of land with building)
11. Carmona, Cavite 328 sq.m., 341 sq.m., 357 sq.m. and 433 sq.m. (parcels of land)
for transfer to PAL under legal process
B. Foreign Properties
1. Hongkong 977 sq.ft. and 3,701 sq.ft. (condominium units)

2. San Mateo, Daly City, California 1,760 sq.m. and 1,193 sq.m. (condominium units)
3. Singapore 85 sq.m., 126 sq.m., and 68 sq.m. (office units)
4, Singapore 65 sq.m. (shop unit)
19
5. Sydney, Australia 177 sq.m. and 229 sq.m. (office units)
In addition, PAL owns cargo buildings located at the following domestic stations:
1. Zamboanga 300 sq.m.

2. Cebu 1,215 sq.m.
3. Puerto Princesa 192 sq.m.
4. Butuan 192 sq.m.
5. Kalibo 192 sq.m.
6. Legazpi 192 sq.m.
PAL’s existing ground facilities service the Airline’s own requirements. These major ground facilities
as of December 31, 2020 are as follows:
The PAL Learning Center (PLC) in Ermita, Manila is a training facility that aims to consistently
provide world-class training to every employee regardless of area of specialization, reinforce the culture
of service, and develop every employee into a total PAL professional committed to the Airline’s
corporate values.
The facility serves as the home for the Airline’s Human Capital's Training & Development Sub-
Department, with the Airline’s training units, namely: Commercial Training & Development Division,
Management & People Development Division, and Training Administration & Logistics Division.
The PLC boasts of new and modern training equipment and facilities such as cabin safety simulator; a
grooming room, a speech laboratory for personality development; and five (5) computer training rooms.
Support facilities include an auditorium/projection room, canteen and a medical clinic. The PLC
building with a total floor area of 6,787.56 sq.m. is leased from the Tan Yan Kee Foundation.
The PAL Inflight Center (IFC) along MIAA Road corner Baltao St., Pasay houses PAL’s inflight
kitchen which is capable of producing more than 4.06 million meals annually to service PAL’s catering
requirements. PAL’s inflight catering requirements are provided by MACROASIA SATS Inflight
Services Corps., for all domestic flights and outgoing flights ex- Manila.
PAL IFC has a total land area of 22,093.00 sq.m. of which 68% is allocated to Catering Services and
the remaining 32% for Cabin Services, warehouse and other offices. The land and the buildings are
leased from the Manila International Airport Authority (MIAA).
The modern NAIA Centennial Terminal 2 in Pasay is where the Airline’s international flights with
domestic connectivity as well as domestic flights with international connectivity is housed in one
terminal. This gives PAL a genuine hub for its operations where passengers from domestic flights can
connect seamlessly unto international flights and vice versa. The terminal boasts of complete facilities
for PAL’s passenger’ comfort and convenience; two Mabuhay Lounges – one each for domestic and
international passengers, a big-ticket office and spacious check-in and pre-departure areas. It is also the
home of the Airport Operation Department and other support offices, i.e., Fleet Control Center, Fuels,
Ticket Office, Treasury and Medical office. The areas are leased from MIAA.
The PAL Cargo Terminal (PCT) near NAIA 1 in Pasay which houses PAL’s domestic and
international cargo operations and sales offices at the NAIA measures 5,727.55 sq.m. (warehouse) and
1,050.88 sq.m. (office space). The land on which it stands is leased from the MIAA.
PAL’s Data Center Building (DCB) along Airport Road, Pasay is the center of applications
development and support. It is where 180 technical staff are located managing the equipment, business
analysis and developer for providing application support. It also houses the oversight group for the
passenger services system. The DCB, comprising 3,588.35 sq.m. open area and 3,806.69 sq.m. covered
area is likewise leased from the MIAA.
20
Other major ground facilities include a Maintenance Base Complex (MBC) in Nichols, Pasay City. It
is composed of the North and South sectors which refer to the areas north and south of Andrews Avenue,
respectively. It covers an area of 104,531.87 sq.m. (open) and 1,768.01 sq.m. (covered) leased from
MIAA. It also covers a Local Area Network (LAN) and Wide Area Network (WAN) that links together
all of PAL’s domestic on-line and office stations as well as the other major offices in Metro Manila.
MBC houses the Operations Group. MBC-NORTH SIDE: PAL GATE 5 - PAL Operations
Accounting, PALEX Accounting; Corporate Logistics & Services, Corporate Logistics & Services
(General Materials & Inflight Purchasing Sub-Department,/Aircraft Operations Support Sub-
Department/Warehouse Management Sub-Department/Ground Handling & Inflight Contracts
Management); Medical (Medical/Flight Surgeon/Dental/Medical Laboratory); PAL Dependents
Medical Plan; Sports Center (Employees Welfare & Communications/Basketball Courts/Tennis Court);
Inflight Training Services Division Training Facility; PAL GATE 3 Area–Warehousing Compound –
Construction & Facilities Management Sub-Dept. (Construction Engineering Division and Facilities
Management Division); General Materials Warehousing Division; Material Sales Management
Division; COMAT Handling Division; Aviation School (Flying School); Inflight Services Training
Division (Cabin Services/Door Training Room); Redbird Flight Simulator; K9 Facility; Records
Warehouses (Financial Services Warehouse/Treasury Records Warehouse/AED-TPR Warehouse);
PAL GATE 4 Area – ISD/Technology Infrastructure Management (Network Management/Desktop
Management); PATC/Ground/Flight Training; Integrated Operations Control Center (Cabin Crew
Scheduling/Flight Dispatch/PALEX IOCC); MBC SOUTH SIDE: PAL GATE 1 – Flight Operations
Building (SVP-Airline Operations/VP-Flight Operations/Planning, Research Evaluation & Flight and
Fuel Analysis//Flight Technical Division/Flight Operations Sub- Department- A350/A340/A320/ Office
of the Chairman); Security Department (Pass Control/Briefing Room); Pilot Lounge-Flight Operations
Dept.; Flight Simulator Building-PAL Aviation Training Center (OAVP-PAL Aviation Training
Center/Flight Training Division/Ground Training Division/Flight Simulator – B320/B321);; Quality
Department; Safety Department; Employee Benefits Services-HCD; Funds Management & Cash
Operations (Cashier)/PALEX Central Flight Dispatch; Fuel Management Department; Aircraft Material
Warehouse; PAL GATE 2 – Security Department (OVP); MBC Canteen; PAL Foundation; Ground
Equipment - ULD Maintenance Sub-Department.
PAL entered into a lease agreement with MIAA in December 2013 for 8.1 hectares of land situated at
Nayong Pilipino Foundation Pasay property (subsequently renamed as Aviation Support Industrial Area
2 or ASIA2) for PAL’s aircraft parking facility.
PAL’s head office is located at the PNB Financial Center along President Macapagal Avenue, Pasay
City. It houses the Office of the President and Office of the Chairman, Commercial Group, Finance
Group, Administration Group, Legal, Corporate Secretary’s Office, Human Capital Department,
Corporate Audit, Corporate Communications and Security Office. The total area being leased from the
Philippine National Bank is 14,584.26 square meters.
Item 3. Legal Proceedings
PAL
PAL was a defendant in a case entitled Transpacific Air Transportation Antitrust Litigation, a putative
class action also for possible violation of U.S. Anti-trust laws brought before the U.S. District Court for
the Northern District of California against air carriers operating passenger air services to and from the
U.S. From the time PAL was impleaded as defendant in this case in 2009, the Court has granted motions
filed and defended by the defendant airlines which effectively narrowed the claims of the plaintiffs. On
January 3, 2017, PAL and the plaintiffs signed a Settlement Agreement to resolve all claims in the
action. On October 11, 2018, the Court approved the Settlement Agreement and as a result, the case has
been finally dismissed with prejudice the case against PAL.
PAL is a petitioner in various cases pending before the Court of Tax Appeals (CTA) for the refund of
excise taxes paid by PAL under protest in connection with its importation of commissary items used for
21
operation in the amount of P
=170.39 million. Up to date, the Supreme Court (SC) has affirmed a grant of
tax refund in a total amount of P
=36.35 million. There is also a grant of refund in favor of PAL in the
amount of additional P =4.57 million which is subject for motion for reconsideration filed by the
Commissioner of Internal Revenue and Collector of Customs with the SC. All other cases are ongoing
with the CTA and the Court of Appeals (CA).
Aside from the importation of commissary items, PAL is also seeking refund of excise taxes paid under
protest on its importation of aviation fuel. PAL filed various cases with the CTA in the aggregate amount
of P
=3.56 million and hearings are now ongoing with the CTA. As of this writing, the SC has affirmed a
grant of tax refund for aviation fuel in a total amount of P=2.96 million. The CTA has likewise granted
PAL a refund in a total amount of P =1.60 billion, which is now currently on appeal with the CTA En
Banc.
In line with its claims for refund of the foregoing taxes on fuel importation for its domestic operations,
PAL has likewise filed for the Declaration of Nullity of a 2002 Department of Energy (DOE)
Certification, a one-liner summation stating “there is locally available jet fuel in reasonable quantity,
quality and price”, thereby effectively overriding PAL’s exemption under its charter which states that
tax exemption is enjoyed by PAL if there is no locally available aviation fuel in “reasonable quantity,
quality or price.” On July 12, 2010, PAL obtained a Preliminary Injunction issued by the Regional Trial
Court (RTC) against the Department of Finance (DOF) and DOE, enjoining the latter from
implementing the 2002 DOE Certification. On February 27, 2014, PAL obtained a decision from the
RTC declaring the aforementioned 2002 DOE certification as null and void and further declaring
permanent the preliminary injunction previously issued. In a Decision dated January 27, 2017, the CA
denied the appeal of DOF and DOE and affirmed the decision of the RTC. As of date, DOF and DOE
has not availed of any remedy available under the Rules.
Other than the foregoing refund cases for the excise taxes paid on PAL’s importations of commissary
items and aviation fuel, PAL has likewise been granted by the SC a total amount of P
=2.70 million for
refund of other taxes, such as 5% withholding tax made by OWWA, 10% overseas Communication Tax
made by PLDT, 20% and 7 ½% final tax withheld by depositary banks on PAL’s interest income, and
20% final withholding tax on PAL’s bank deposits.
PAL is also a petitioner in a case filed with the Commission on Audit for money claim against Manila
International Airport Authority (MIAA) where PAL requested for the refund of a total amount of
=2.09 billion representing the overpayment of rentals made by PAL to MIAA from June 1999 up until
P
October 2016. The basis of this case is the nullification of MIAA’s Resolution Nos. 98-30 and 99-11
which unilaterally increased the airport rental rates and MIAA’s approval of PAL’s claim as shown in
its Board Resolution No. 2010-026.
Except for the foregoing, PAL or any of its subsidiaries or affiliates is not involved in, nor any of its
properties the subject, of any legal proceeding and has no knowledge of any contemplated proceeding
by any government authority involving an amount exceeding P =3.46 billion (10% of its total current
assets) for the year ended December 31, 2020.
APC
APC has on-going claims for refund filed with the CTA pertaining to excise taxes paid on the
importation of Jet A-1 aviation fuel used for its domestic operations in the amount of P
=709.0 million.
Up to date, the CTA has granted APC a refund of a total amount of P =660.6 million representing the
excise tax paid on its importation of jet fuel for use in APC’s domestic operations. The Commissioner
of Internal Revenue and the Commissioner of Customs, however, assailed the CTA’s decisions which
are now pending with the SC.
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Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of security holders during the fourth quarter of the calendar
year ended December 31, 2020.
PART II - OPERATIONAL AND FINANCIAL INFORMATION
Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters
A. Market Price of and Dividends on Registrant’s Common Equity and Related Stockholder Matters
1. Market Information
The market for the registrant’s common equity is the Philippine Stock Exchange. The high, low
and closing prices for each quarter for the past three years are as follows:
HIGH LOW CLOSE

Php Php Php
2021
First Quarter 7.20 5.85 6.20
2020
Fourth Quarter 8.50 5.00 6.55
Third Quarter 6.80 5.70 5.85
Second Quarter 7.40 5.99 6.80
2019
2018
As of June 14, 2021, the latest practicable trading date, the Company’s shares were traded at
P6.16 per share.
2. Holders
The number of shareholders of record as of December 31, 2020 is 6,453 and common shares
outstanding as of the same date were 11,610,978,242. The Company has no preferred shares.
The top 20 stockholders as of December 31, 2020 are as follows:
Stockholders’ Name No. of Shares Held % to Total

1 Trustmark Holdings Corporation 8,930,733,170.00 76.9161%
2 ANA Holdings, Inc. 1,103,042,933.00 9.5000%
3 Top Direct Investments Ltd. 1 460,507,500.00 3.9661%
4 Cosmic Holdings Corporation 378,206,590.00 3.2573%
5 Fast Accurate Investments Ltd. 206,842,500.00 1.7814%
6 City Trade Investments Ltd. 176,400,000.00 1.5192%
7 Corporate Supreme Ltd. 171,000,000.00 1.4727%
23
8 PCD Nominee Corporation (Filipino) 65,713,360.00 0.5660%
9 One Corporate Grand Tours Inc. 2 36,000,000.00 0.3101%
10 Principal Grand Tours International Inc. 2 36,000,000.00 0.3101%
11 Pan-Asia Securities Corp. 16,240,209.00 0.1399%
12 Government of the Republic of the
Philippines 9,450,000.00 0.0814%
13 Wonderoad Corporation 4,613,255.00 0.0397%
14 AFP Retirement and Separation Benefits
System 2,981,797.00 0.0257%
15 AAA Strategic Investment Ltd. 1,581,817.00 0.0136%
16 PCD Nominee Corporation (Non-Filipino) 944,244.00 0.0081%
17 William Lee 314,172.00 0.0027%
18 Commercial Investment Co. Ltd. 229,708.00 0.0020%
19 Luisita P. Bothelho 181,124.00 0.0016%
20 Allen Cham 154,787.00 0.0013%
1
Subscription rights were assigned to Videlo Holdings, Inc. (VHI) on October 23, 2014. The application for
clearance to register the subscription rights under the name of VHI is still pending approval with the BIR.
2
Subscription rights were assigned to Emelar Holdco, Inc. (EHI) on October 23, 2014. The application for
clearance to register the subscription rights under the name of EHI is still pending approval with the BIR.
3. Dividends
a. The Company did not declare any cash dividends during the past 3 years. The Board of
Directors may declare dividends only from the surplus profits arising from the business of
the Company and in accordance with the preferences constituted in favor of preferred stock
when and if such preferred stock be issued and outstanding.
b. There are no other restrictions that limit the ability to pay dividends on common equity or
that are likely to do so in the future.
4. Recent Sales of Unregistered or Exempt Securities, Including Recent Issuance of Securities

Constituting an Exempt Transaction (for the past 3 years).
There was no recorded sale of unregistered securities during the past 3 years.
Item 6. Management’s Discussion and Analysis (MDA)
Restatement to Philippine Peso
In line with the adoption of PAS 21, The Effects of Changes in Foreign Currency Rates, PAL determined
that its functional currency is the US Dollar. On May 20, 2005, the Philippine SEC approved PAL’s use
of its functional currency, the US Dollar, as its presentation currency. Accordingly, effective April 1,
2005, PAL proceeded in measuring its results of operations and financial position in US Dollar.
Since the functional and presentation currency of the Company is in Philippine Peso, for purposes of
combination of the financial statements in accordance with PFRS 10, Consolidated Financial
Statements, there is a need for PAL and its subsidiaries to restate its financial statements to the Philippine
Peso.
Consolidation
The consolidated financial statements referred to consist of the financial statements of the Company and
its subsidiaries. The financial statements of the subsidiaries are prepared using consistent accounting
policies as those of the Company. Companies included in the consolidation are PAL and PR and ZUMA.
24
The Company owns 98.92% of PAL, through a direct ownership in 98.57% of PAL’s shares and an
indirect ownership in 0.35% of PAL’s shares through an 82.33% direct ownership in PR. In turn, PR
owns 0.42% of PAL. The Company acquired 51% ownership interest in ZUMA in 2017, and thereby
obtaining control over ZUMA, the holding company of APC. Subsidiaries are consolidated from the
date on which control is transferred to the Company and cease to be consolidated from the date on which
control is transferred out of the Company. All intercompany accounts and transactions with subsidiaries
are eliminated in full.
Results of Operations
2020 vs 2019
The Company reported a total comprehensive loss of P =73.00 billion for the year ended December 31,
=62.80 billion from last year’s total comprehensive loss of P
2020, significantly higher by P =10.20 billion,
as the Group’s operations were severely affected by the worldwide travel restrictions due to
COVID-19 pandemic.
Consolidated revenues for the year ended December 31, 2020 amounted to P =55.26 billion, 64.2% lower
than the P
=154.54 billion recognized in 2019. The significant decline in revenues was mainly due to the
drop in passenger and ancillary revenues as a result of flight cancellations starting March 2020 due to
COVID-19 pandemic.
Consolidated operating expenses were reduced by 46.0% from P =151.66 billion in 2019 to P
=81.84 billion
in 2020 mostly driven by the Group’s operations in a limited capacity.
Flying operations expenses dropped by P =33.75 billion, 41.1% lower versus last year’s balance of
=82.18 billion mainly due to lower fuel expenses. The significant decrease in number of flights
P
operated resulted in the reduction of fuel consumption by 61.0%.
Aircraft and traffic servicing likewise decreased to P=7.18 billion or 63.6% lower than the P=19.73
billion year ago level balance mainly due to lower ground handling and landing and take-off charges.
Passenger service expenses decreased by 61.1% from P

=13.07 billion to P
=5.08 billion due to lower
passenger food and cabin crew costs.
=12.44 billion from last year’s P

Maintenance expenses dropped by 40.4% to P =20.85 billion driven by
lower utilization of aircraft.
Reservation and sales were lower at P =3.20 billion in 2020 as compared to P

=10.94 billion in 2019
mainly due to the significant decrease in sales due to travel restrictions.
General and administrative expenses increased to P =5.53 billion or 12.8% higher than last year’s
balance of P
=4.90 billion as a result of the centralized charging of some overhead expenses to general
and administrative. This was offset in part by savings in manpower costs due to the mandatory leave
without pay as allowed by the Department of Labor & Employment and reduction in management pay.
Other charges-net increased to P=29.45 billion from the P=2.04 billion last year’s total mainly due to
impairment loss recognized for some of the Group’s operating fleets. This was slightly offset by the
decrease in financing charges by P
=2.19 billion or 18.2%.
The movements of deferred tax assets and liabilities on all deductible temporary differences in
accordance with PAS 12, Income Taxes particularly the derecognition of prior year’s NOLCO of PAL
as of December 31, 2020, resulted an income tax expense of P
=7.09 billion for the current period.
The Company recognized other comprehensive income of P

=79.98 million in 2020 versus other
25
comprehensive loss of P=496.24 million in 2019. This was mainly brought about by the favorable effect
of foreign exchange translation partly offset by the losses on fair value adjustments of the Company’s
quoted investments.
2019 vs 2018
The Company reported a consolidated total comprehensive loss of P=10.20 billion for the year ended
=7.36 billion higher than last year’s consolidated total comprehensive loss of
December 31, 2019, P
=2.84 billion.
P
Consolidated revenues amounted to P =154.54 billion for the year ended December 31, 2019, up by
=4.06 billion or 2.7% higher than the same period last year. This was on account of the increase in
P
passenger revenues by 4.2% due to additional frequencies and new routes which resulted to the growth
in passenger numbers, partly offset by lower cargo revenues by 8.2% and ancillary revenues by 5.0%.
Consolidated expenses for the year ended December 31, 2019 decreased by P =4.80 billion or 3.1% versus
the same period in 2018. The main contributors for the decrease were flying operations and passenger
service expenses, which were partly offset by the increase in aircraft and traffic servicing expenses.
Flying operations expenses decreased by P =4.72 billion or 5.4% on account of lower jet fuel costs due to
the decrease in jet fuel price from an average of US$ 94.38 per barrel in 2018 to US$ 86.93 per barrel
in 2019. The adoption of PFRS 16, Leases in 2019 resulted to the increase in depreciation by
=16.92 billion and reduction in lease charges by P
P =16.87 billion due to changes in accounting for leases.
Passenger service expenses declined by P

=245.71 million or 1.9% mainly due to lower expenses in flight
amenities.
Aircraft and traffic servicing expenses increased by P

=180.23 million or 0.9% mainly due to higher
landing and take-off fees.
Total other charges amounted to P =14.07 billion in 2019, up by P =12.63 billion or 873.6% from
=1.45 billion in 2018. Financing charges increased by P
P =6.76 billion or 128.4% mainly due to the
adoption of PFRS 16 and additional aircraft financing. There were also more charges incurred during
the year and significantly less one-off gains compared to 2018 where it booked income from reversal of
provision for contingency for the Flight Attendants and Stewards Association of the Philippines
(FASAP) case, reassessment of the carrying values of asset restoration obligations for certain aircraft
and credit memos received from various aircraft manufacturers.
Income tax benefit of P

=1.50 billion was recognized during the current period as a result of the operations
of the Group as well as the movements of deferred tax assets and liabilities on all deductible temporary
differences in accordance with PAS 12, Income Taxes.
For the year ended December 31, 2019, the Company recognized other comprehensive loss of
=496.24 million as against the other comprehensive income of P
P =864.15 million in 2018. The decline
was mainly due to the changes in actuarial assumptions of retirement benefits.
2018 vs 2017
The Company’s financial performance for the year ended December 31, 2018, showed a consolidated
total comprehensive loss of P
=2.84 billion or 38.3% lower as compared with the consolidated total
comprehensive loss of P
=4.61 billion in 2017.
Consolidated revenues for the year ended December 31, 2018 amounted to P =150.48 billion, up by
=20.96 billion or 16.2% over the last year’s figure of P
P =129.52 billion. Passenger revenues which
contributed the biggest share of 85.7% of the total revenues grew by P
=17.67 billion in 2018 as a result
26
of the increase in the volume of passengers carried and number of flights operated. PAL operated
112,072 flights and carried 15.9 million passengers in 2018 vis a vis 103,362 flights and 14.5 million
passengers in 2017. Cargo revenues increased by 21.7% or P =1.82 billion due to volume and
improvement in yields. Ancillary revenues likewise increased by 17.0% or P =1.63 billion as a result of
the growth in volume of passengers.
Consolidated expenses increased by 18.5% from P =132.09 billion for the year ended December 31, 2017
to P
=155.47 billion in the same period in 2018. The increase in expenses was attributable to higher flying
operations, aircraft and traffic servicing, maintenance and reservation and sales expenses.
The increase in flying operations expenses was attributable to fuel costs and lease charges. Fuel
consumption increased by P =14.36 billion from P
=38.43 billion in 2017 to P
=52.79 billion in 2018. The
increase was mainly due to the escalation in jet fuel prices from an average of US$ 75.59 per barrel in
2017 to US$ 94.38 per barrel in 2018. Lease charges also increased by P =3.91 billion due to the delivery
of additional two aircraft in December 2017 and nine aircraft in 2018.
Growth in number of flights operated in 2018 had the effect of increasing aircraft and traffic servicing
expenses by P
=1.69 billion or 9.5% on account of ground handling charges and landing and take-off fees.
Maintenance costs increased by 7.9% or P =1.53 billion from P

=19.44 billion in 2017 to P
=20.97 billion in
2018 as a result of additional aircraft deliveries in 2018.
Higher booking fees and volume incentives as a result of the growth in sales in 2018 increased the
reservation and sales expenses to P
=10.86 billion or 12.4% higher than the P
=9.67 billion in 2017.
Total other charges amounted to P =1.45 billion in 2018 versus the P

=3.90 billion incurred in 2017. The
reduction in expense by P=2.45 billion was primarily due to the reversal of provision for contingency for
the Flight Attendants and Stewards Association of the Philippines (FASAP) case as a result of Supreme
Court’s final decision dated September 18, 2018 in favor of PAL.
The reassessment done on deferred tax assets and liabilities on all deductible temporary differences in
accordance with PAS 12, Income Taxes during the year 2018, resulted in the recognition of income tax
benefit of P
=3.72 billion.
For the year ended December 31, 2018, the Company recognized other comprehensive income of
=864.15 million which was attributable mainly to the changes in actuarial assumptions primarily due to
P
the increase in discount rates. This was lower than last year’s other comprehensive income of
=1.86 billion which was recognized as a result of the increase in market value of the Company’s quoted
P
investments.
Financial Condition
2020
The Company’s consolidated total assets as of December 31, 2020 amounted to P =227.90 billion, 28.3%
lower than the December 31, 2019 balance of P=317.83 billion. This was primarily brought about by the
decrease in property and equipment and cash and cash equivalents.
Total current assets dropped by 32.4% from P =47.81 billion as of December 31, 2019 to P =32.31 billion
as of December 31, 2020, driven mainly by the decrease in cash and cash equivalents by 84.4%. The
Group’s cash was depleted due to large volume of refunded tickets coupled by enormous drop in sales
due to COVID-19. Receivables likewise decreased by 7.0% as well as expendable parts, fuel, materials
and supplies account by 27.4%. Assets held for sale decreased by 93.3% due to reclassification of certain
aircraft back to property and equipment-at cost. On the other hand, other current assets increased by
28.5% on account of higher derivative assets.
27
Total noncurrent assets decreased by 27.6% or P =74.43 billion from P=270.02 billion as of December 31,
2019 to P=195.59 billion as of December 31, 2020 mainly attributable to the decrease in property and
equipment, deferred tax assets and investment properties. The impairment of some aircraft as well as
depreciation reduced the balance of property and equipment-at cost by P =61.98 billion or 26.2%. Deferred
tax assets was zeroed out as a result of the derecognition of PAL’s NOLCO pertaining to prior years.
Investment properties decreased by 55.1% due to disposal made during the year. Other noncurrent assets
decreased by 22.2% or P =5.34 billion mainly due to reclassification of derivative assets to current assets
and lower long-term security deposits.
Consolidated total liabilities decreased by 5.4% or P

=16.93 billion from P =312.93 billion as of December
31, 2019 to P =296.00 billion as of December 31, 2020. This was due to the decrease in total noncurrent
liabilities by 52.6% or P
=110.66 billion partly offset by the increase in total current liabilities by 91.4%
or P=93.74 billion.
Current liabilities increased by P

=93.74 billion mainly due to the increase in current portion of long-term
obligations and accrued expenses and other current liabilities. Current portion of long-term obligations
increased to P=119.90 billion or 303.5% higher than last year’s balance P =29.71 billion. The Group was
unable to fulfill the debt servicing agreements for most of its long-term obligations during the current
year, thus, the entire balance for these loans were reclassified as current liabilities. Accrued expenses
and other current liabilities increased by 65.2% mainly due to lease charges which is composed of the
unpaid portion of the lease liabilities that are due as of December 31, 2020. Notes payable decreased by
=7.15 billion or 38.6% due to payments made. Unearned transportation revenue decreased by P
P =7.45
billion or 46.1% due to refunded tickets.
Noncurrent liabilities decreased by P

=110.66 billion as a result of the reclassification of long-term
obligations to current liabilities.
The consolidated total comprehensive loss for the year ended December 31, 2020 increased the deficit
to P
=88.97 billion and resulted to total capital deficiency of P
=68.11 billion as of December 31, 2020.
2019
The Company’s consolidated total assets as of December 31, 2019 amounted to P =317.83 billion, 59.6%
higher than the December 31, 2018 balance of P =199.20 billion. The significant increase was brought
about by the adoption of PFRS 16, Leases, effective January 1, 2019 as discussed in Note 3 of the Notes
to the Consolidated Financial Statements.
The increase in total current assets by P =8.13 billion or 20.5% from P =39.68 billion as of
December 31, 2018 to P =47.81 billion as of December 31, 2019 was primarily due to improved cash
levels which increased by 116.3%. Expendable parts, fuel, materials and supplies account increased by
5.4% driven by the build-up of flight equipment expendable parts. Likewise, assets held for sale
increased by 131.9% due to reclassification of two aircraft. Other current assets declined by 20.7%
mainly due to lower derivative assets and deposits and prepayments.
The increase in total noncurrent assets by P

=110.50 billion or 69.3% was mainly due to the recognition
of right-of-use assets under property and equipment-at cost which increased by 84.1% due to the
adoption of PFRS 16. Deferred income tax assets increased by 52.0% or P
=1.72 billion. Other noncurrent
assets likewise increased by 5.4% due to higher security deposits.
Consolidated total liabilities increased by 66.0% from P =188.51 billion as of December 31, 2018 to
=312.93 billion as of December 31, 2019. This was on account of the increase in total current liabilities
P
by 8.8% from P =94.29 billion as of December 31, 2018 to P=102.59 billion as of December 31,2019 and
increase in total noncurrent liabilities of 123.2% from P
=94.22 billion to P
=210.34 billion.
28
Current liabilities increased by 8.8% primarily due to the increase in current portion of long-term
obligations and accrued expenses and other current liabilities, partly offset by the decrease in notes
payable and accounts payable. The increase in current portion of long-term obligations by P=9.57 billion
or 47.5% was due to the recognition of lease liabilities for right-of-use assets under PFRS 16. Accrued
expenses and other current liabilities went up by P =2.11 billion or 10.1% on account of higher
maintenance and repair costs. Notes payable and accounts payable decreased as there were payments
made during the year.
Noncurrent liabilities grew by 123.2% as a result of the adoption of PFRS 16. The recognition of lease
liabilities for right-of-use assets increased the long-term obligations by P
=101.34 billion or 129.3%.
Accrued employee benefits increased by 21.2% due to additional provision for retirement. Reserves and
other noncurrent liabilities increased by 21.3% mainly due to deferred revenue under frequent flyer
program.
In 2019, PAL received cash as deposits for future stock subscription from its shareholders totaling
₱11.41 billion with the intention to convert to equity upon approval by the SEC of PAL’s application
for the increase in authorized capital stock. As of December 31, 2019, the cash deposits are presented
as deposit from non-controlling interest of a subsidiary under noncurrent liabilities.
Consolidated total equity balance as of December 31, 2019 amounted to P =4.90 billion, down by 54.2%
from the December 31, 2018 balance of P =10.69 billion. This was on account of the increase in deficit
brought about by the reported net loss during the year and other comprehensive loss resulting from
remeasurement losses on defined benefits plans. Non-controlling interests increased by 183.5% due to
PAL’s disposal of partial interest in a subsidiary.
2018
As of December 31, 2018, the Company’s consolidated total assets amounted to P =199.20 billion or
=19.24 billion higher than December 31, 2017 balance of P
P =179.96 billion. The increase was on account
of the upward movement in total current assets and noncurrent assets.
Total current assets grew by P =3.83 billion or 10.7% from P

=35.86 billion as of December 31, 2017. This
was due to the increase in other current assets, receivables, and expendable parts, fuel, materials and
supplies offset in part by the decrease in cash and cash equivalents.
Cash and cash equivalents decreased by P =3.09 billion or 30.7% as compared to the previous year’s
balance of P
=10.07 billion due to settlement of loans due in 2018.
Receivables went up by P
=2.00 billion or 11.3% mainly from non-trade receivables.
Expendable parts, fuels materials and supplies grew by 39.1% or P

=1.37 billion due to increase in flight
equipment expendable parts and fuel inventory.
Other current assets increased by P =3.60 billion versus the December 31, 2017 balance of P
=3.75 billion
mainly attributed to the effect of remeasurement of outstanding fuel deals to fair value.
Assets held for sale was reduced by 5.3% due to sale of some aircraft.
Total noncurrent assets increased by P

=15.42 billion or 10.7% higher than the December 31, 2017 balance
of P
=144.10 billion. This was mainly due to the increase in property and equipment-at cost, other
noncurrent assets and deferred income tax assets-net.
Property and equipment-at cost grew to P=128.40 billion as of December 31, 2018, P
=7.09 billion higher
than last year’s balance of P
=121.31 billion, mainly due to acquisition of A321NEO aircraft offset by
return of pre-delivery payments made for delivered aircraft.
29
Deferred income tax assets-net increased to P
=3.31 billion as of December 31, 2018 due to recognition
of net operating loss carry over.
Other noncurrent assets as of December 31, 2018 amounted to P =22.77 billion, up by P

=5.52 billion from
the previous year’s balance of P =17.25 billion, mainly attributed to the effect of remeasurement of
outstanding fuel deals to fair value and security deposits for aircraft deliveries.
Total liabilities increased to P

=188.51 billion versus the December 31, 2017 balance of P =165.98 billion
as a result of the increase in current liabilities by 12.0% or P
=10.13 billion and increase in noncurrent
liabilities by 15.2% or P=12.40 billion.
The 12.0% increase in current liabilities was mainly driven by the increase in accrued expenses by
=5.90 billion or 39.3% due to the effect of remeasurement of outstanding fuel deals to fair value and
P
maintenance repair costs. Accounts payable likewise increased by P =5.28 billion or 46.3% on account of
maintenance, ground handling charges, and landing and take-off fees. Notes payable grew by
=2.61 billion or 14.7% due to availments of short-term loans. These were offset in part by the decrease
P
in current portion of long-term obligations by P
=3.41 billion or 14.5% due to settlement made.
The increase in noncurrent liabilities by 15.2% or P =12.40 billion from P =81.82 billion as of
December 31, 2017 to P =94.22 billion as of December 31, 3018 was mainly due to long term obligations
which increased by P=11.65 billion or 17.5% as a result of the delivery of six A321NEO aircraft under
finance lease. Reserves and other noncurrent liabilities grew by P=610.07 million or 12.5% due to the
effect of remeasurement of outstanding fuel deals to fair value.
The Company’s consolidated total equity was down by 23.5% from P =13.98 billion as of
December 31, 2017 to P =10.69 billion as of December 31, 2018. The decline was brought about mainly
by the total comprehensive loss for the year ended December 31, 2018. Additional paid-in capital (APIC)
decreased by P =25.34 billion as the SEC approved the Company’s equity restructuring to partially wipe
out the Company’s deficit using its APIC. Other equity reserves of P =1.36 billion was recognized as a
result of the change in ownership interest of PAL in Fortunate Star Limited (FSL) in 2018.
KEY PERFORMANCE INDICATORS
The Company uses the following major performance measures. Analyses are employed by comparisons
and measurements on a consolidated basis based on the financial data as of and for the years ended
December 31, 2020, 2019 and 2018.
Key Performance Indicators 2020 2019 2018

Total Comprehensive Loss Attributable to
Equity Holders (₱70.52 B) (₱11.25 B) (₱3.67 B)
Current Ratio 0.16 0.47 0.42
Debt to Equity Ratio (2.88) 46.54 11.13
Basic Loss Per Share:
Computed based on Net Loss (₱6.185) (₱0.888) (₱0.373)
Computed based on Total Comprehensive Loss (P
=6.074) (P
=0.969) (P
=0.316)
The manner by which the Company calculates the above indicators are as follows:
Current Ratio = Current Assets / Current Liabilities

Debt to Equity Ratio = (Notes Payable + Current and Noncurrent Long-term
Obligations) / Total Equity
Earnings (Loss) Per Share = Net Income (Loss) or Total Comprehensive Income
(Loss) Attributable to Holders of Parent Company / Common Shares Outstanding
30
TOP FIVE KEY PERFORMANCE INDICATORS OF PAL
Mission Statement Key Performance Indicator Measurement Methodology
To maintain aircraft with the Aircraft Maintenance Check Number of checks performed
highest degree of airworthiness, Completion less number of maintenance
reliability and presentability in the delays over number of checks
most cost and effective manner performed
To conduct and maintain safe, Number of aircraft related By occurrence and monitoring
reliable, cost and effective flight accidents/incidents by Flight Operations Safety
operations Office
To achieve On-Time Performance Percentage Deviation from Number of flights operated
on all flights operated Industry Standards (OTP less number of flights delayed
Participation) over total flights operated
To provide safe, on time, quality Number of safety violations Number of incidents of safety
and cost-effective inflight service incurred by cabin crew violation incurred by cabin
for total passenger satisfaction crew per month
To maximize revenue generation Net Revenues generated from Percentage Deviation from
in passenger and cargo sales passengers and cargoes carried Budget/Forecasted Revenues
through increased yields by
diversifying market segments and
efficient management of seat
inventory and cargo space
Other than those that have already been disclosed, there are no known trends, demands, commitments,
events or uncertainties that may have a material impact on the Group’s liquidity.
i. Other legal proceedings
• On July 22, 2008, the SC rendered an adverse decision in the case entitled “Flight Attendants and
Stewards Association of the Philippines (FASAP) vs. the Philippine Airlines” ordering PAL to
reinstate the retrenched FASAP members and pay back wages inclusive of allowances and other
monetary benefits plus 10% attorney’s fees. PAL filed a Motion for Reconsideration. On
October 2, 2009, the Motion for Reconsideration was denied with finality and affirmed the
July 22, 2008 decision with modification in that the award of attorney’s fees and expenses of
litigation is reduced to P
=2.0 million. On November 3, 2009, PAL filed a Second Motion for
Reconsideration. On September 7, 2011, the SC issued a resolution denying with finality PAL’s
Second Motion for Reconsideration.
In a subsequent turnaround, the SC, on October 4, 2011, issued another resolution recalling the
September 7, 2011 resolution which denied the Second Motion for Reconsideration due to
procedural lapses in arriving at the September 7, 2011 Resolution. The SC en banc thus accepted
and took cognizance of PAL’s Second Motion for Reconsideration and the case was re-raffled to a
new Member-in Charge.
FASAP filed a Motion for Reconsideration of the October 4, 2011 resolution of the SC en banc. In
a resolution dated March 13, 2012, the SC denied FASAP’s Motion for Reconsideration and
affirmed the recall of the September 7, 2011 resolution. FASAP filed Motion for Leave to Admit
the Motion for Reconsideration dated April 4, 2012, which was granted by the SC in a resolution
dated April 24, 2012.
On March 13, 2018, the SC en banc finally promulgated a decision on PAL’s Second Motion for
Reconsideration and FASAP’s Motion for Reconsideration. Affirming the decision of the Court of
Appeals dated August 23, 2006, the SC en banc confirmed the validity of the retrenchment in 1998
31
due to very serious business losses. The SC emphasized that retrenchment or downsizing is a mode
of terminating employment resorted to by management during periods of business recession,
industrial depression or seasonal fluctuations or during lulls over shortage of materials. It is a
reduction in manpower, a measure utilized by an employer to minimize business losses incurred in
the operation of its business. The SC noted that PAL was then in dire financial distress. In fact, the
SC recognized that PAL underwent corporate rehabilitation sufficiently indicates its fragile
financial condition. After having been placed under corporate rehabilitation and its rehabilitation
plan having been approved by the Philippine SEC on June 23, 2008, PAL's dire financial
predicament could not be doubted.
The SC went on to say that even FASAP admitted the financial situation of PAL then questioning
only the manner and lack of standard in carrying out the retrenchment. The SC, however, explained
that PAL observed good faith in implementing the retrenchment. As the SC puts it, as between
maintaining the number of its flight crew and the PAL’s survival, it was reasonable for PAL to
choose the latter alternative. The SC said that it cannot legitimately force PAL as a distressed
employer to maintain its manpower despite its dire financial condition. Moreover, the SC pointed
out that being under a rehabilitation program, PAL had no choice but to implement the measures
contained in the program, which included that of reducing its manpower.
Corollary, the SC affirmed that PAL resorted to both efficiency rating and inverse seniority in
selecting the employees to be subject of termination. It was ruled that there is no indication that
provisions of the Collective Bargaining Agreement have been grossly disregarded as to taint the
retrenchment with illegality. PAL relied on specific categories of criteria, such as merit awards,
physical appearance, attendance and check rides, to guide its selection of employees to be
removed. The SC did not find anything legally objectionable in the adoption of these norms.
Finally, the SC affirmed the validity of the quitclaims signed by the employees. Thus, the
dispositive portion of the March 13, 2018 ruling of the SC reads as follows:
“WHEREFORE, the Court:
(a) GRANTS the Motion for Reconsideration of the Resolution of October 2, 2009 and
Second Motion for Reconsideration of the Decision of July 22, 2008 filed by the
respondents Philippine Airlines, Inc. and Patria Chiong;
(b) DENIES the Motion for Reconsideration (Re: The Honorable Court's Resolution dated
March 13, 2012) filed by the petitioner Flight Attendants and Stewards Association of the
Philippines;
(c) SETS ASIDE the decision dated July 22, 2008 and resolution dated October 2, 2009;
and
(d) AFFIRMS the decision of the Court of Appeals dated August 23, 2006.”
• On September 9, 2010 FASAP filed a Notice of Strike for alleged Unfair Labor Practice on the
grounds of PAL’s refusal to submit counter proposal and/or conclude the remaining term of
2005-2010 CBA, address age and gender discrimination, salary increase and rice subsidy. Attempts
by the National Conciliation and Mediation Board (NCMB) to amicably settle the labor dispute
failed. Thus, on October 6, 2010 the DOLE Secretary assumed jurisdiction over the labor dispute
and directed the parties to submit their respective position papers and other pleadings.
On December 23, 2010, the Department of Labor & Employment (DOLE) issued a Decision in
favor of FASAP granting salary increase and monthly rice allowance for the period July 16, 2007
to July 15, 2010 and higher compulsory retirement from 45 to 60 years old. On April 1, 2011 DOLE
Secretary issued a Decision on the PAL’s Motion for Partial Reconsideration and Motion for
Clarification. The DOLE Secretary affirmed with modification the December 23, 2010 DOLE
Decision in that the award of monthly rice allowance for the first year of the CBA effective
July 16, 2007 was reduced from P =1,800 to P=1,500. PAL was also directed to reinstate 9 flight
32
pursers who were retired at age 55 during the pendency of the case and to pay them full back wages
and benefits. The 9 flight pursers who were retired at age 55 were reinstated and those active cabin
attendants due for retirement at age 55 were allowed to continue until age 60 without prejudice to
further or other legal action on the issue. On May 17, 2011, PAL elevated the case to the CA via
a Petition for Certiorari with prayer for issuance of a Temporary Restraining Order and Preliminary
Mandatory Injunction. On June 18, 2013, the CA rendered a Decision which partly granted the
Petition insofar as the salary increase and the compulsory age retirement are concerned. FASAP
filed a Motion for Reconsideration against which PAL filed its Comment. FASAP filed its Reply.
On May 29, 2014, the CA denied FASAP’s Motion for Reconsideration. FASAP filed a Petition
for Review with the SC. The group of purser Pauline Gopez filed a Petition for Intervention. PAL
filed its Comment to the Petition. The Commission on Human Rights filed a Motion for Leave of
Court to file Petition for Intervention dated January 26, 2015.
On March 20, 2018, PAL received a copy of the Supreme Court’s resolution dated January 2, 2018
where the High Court resolved to:
NOTE and DEEM AS SERVED by substituted service the returned and unserved copy of the
Resolution dated 25 April 2017 sent to Ms. Veronica G. Han; and
REQUIRE the parties to MOVE IN THE PREMISES within 30 days from notice otherwise, the
case shall be deemed CLOSED and TERMINATED."
Per En Banc Resolution dated September 18, 2018, [G.R. No. 178083 (Flight Attendants and
Stewards Association of the Philippines vs. Philippine Airlines, Inc., et al.) and A.M. No. 11-10-
1-SC (Re: Letters of Atty. Estelito P. Mendoza)] the Supreme Court resolved to note the
following:
“(a) Manifestation dated August 20, 2018 filed by counsel for respondents Philippine Airlines,
Inc. and Patricia Chiong, manifesting that the resolution dated June 05, 2018 was sent to
counsel's old address at 4th floor, Dynavision Building, 108 Rada Street, Legaspi Village,
Makati City, and that he only received the same by registered mail on August 20, 2018, hence,
his comment would be due on August 30, 2018; and
(b) Aforesaid 'Comment of Respondents Philippine Airlines, Inc. and Patricia Chiong as
Required by the Court's Resolution of June 05, 2018,' dated August 30, 2018.
Acting on the Motion for Reconsideration (Re: Resolution dated March 13, 2018) and Second
Motion for Reconsideration (Re: Resolutions dated October 4, 2011 and March 13, 2012), dated
April 10, 2018 filed by counsel for Flight Attendants and Stewards Association of the Philippines,
the Court resolved to DENY WITH FINALITY the said motions for reconsideration as the basic
issues raised therein have been passed upon by this Court and no substantial arguments were
presented to warrant the reversal of the questioned resolutions x x x”.
PAL is awaiting issuance of Entry of Judgment.
ii. The Group’s liquidity situation became more critical in 2020 and 2021 due to severely weak
passenger sales and revenue as an adverse effect of the COVID-19 pandemic. The COVID-19
outbreak and the measures taken by the Philippine and foreign governments have caused
disruptions to PAL’s passenger operations, resulting to temporary suspension and limited
operations of its flights both for domestic and international routes. Consequently, the decline in
revenue and cash inflows has put significant strain on the Group’s liquidity position and on its
compliance with certain loan covenants.
33
The Group has not made principal and/or interest payments due in respect to its long-term
obligations since April 2020, resulting in breach of certain loan covenants and default provisions
in the lease and loan agreements.
Due to the difficulty in sourcing additional financing, the Group is embarking on a financial
restructuring plan to ensure the Group’s business continuity. Please refer to Note 2 of the Notes to
Consolidated Financial Statements.
Other than this, there are no known events that will trigger direct or contingent financial obligation
that is material to the Group, including any default or acceleration of an obligation
iii. There are no known material off-balance sheet transactions, arrangements, obligations (including
contingent obligations), and other relationships of the Company with unconsolidated entities or
other persons created during the reporting period.
iv. There are no known material off-balance sheet transactions, arrangements, obligations (including
contingent obligations), and other relationships of the Company with unconsolidated entities or
other persons created during the reporting period.
v. Commitments for capital expenditures
As of December 31, 2020, the remaining aircraft that are for delivery in the future include: (i)
thirteen (13) Airbus 321-231 NEO with one scheduled for delivery in December 2021 and the
remaining twelve (12) aircraft to be delivered between 2022 and 2025. Due to the COVID-19
contagion which has had a catastrophic impact on the world economy, most specially in the airline
industry, PAL and Airbus are currently in discussion for further deferral of the deliveries.
vi. To curb the alarming increase in COVID-19 cases in recent months, various measures were taken
by the Philippine and foreign governments causing disruptions to the Group’s passenger operations.
Philippine Airlines continue to operate domestic and international flights subject to restrictions and
requirements of the IATF (Inter-Agency Task Force on Emerging Infectious Diseases) and the
concerned local government units (LGUs) for each route.
Other than this, there are no known trends, events or uncertainties that have had or that are
reasonably expected to have material favorable or unfavorable impact on net sales or revenues or
income from continuing operations.
vii. There are no significant elements of income that did not arise from continuing operations.
viii. The causes for any material change from period to period which shall include vertical and
horizontal analyses of any material item:
Results of our Horizontal (H) and Vertical (V) analyses showed the following material changes as
of and for the years ended December 31, 2020 and 2019:
1. Cash and cash equivalents- H- (84.4%)

2. Receivables- H- (7.0%)
3. Expendable parts, fuel, materials and supplies- H- (27.4%)
4. Other current assets- H- 28.5%
5. Assets held for sale- H- (93.3%)
6. Property and equipment-at cost- H- (26.2%)
7. Property and equipment-at appraised- H- (13.5%)
8. Investment properties- H- (55.1%)
9. Deferred income tax assets- H- (100%)
10. Other noncurrent assets- H- (22.2%)
34
11. Notes payable- H- (38.6%)
12. Accounts payable- H- 20.7%
13. Accrued expenses and other current liabilities- H- 65.2%; V-9.5%
14. Unearned transportation revenue- H- (46.1%)
15. Current portion of long-term obligations- H- 303.5%; V-43.3%
16. Long-term obligations-net of current portion- H- (64.0%); V- (28.2%)
17. Accrued employee benefits- H- (7.3%)
18. Reserves and other noncurrent liabilities- H- 15.7%
19. Other components of equity- H- 51.5%
20. Deficit- H- 416.8%; V- (33.6%)
21. Non-controlling interests - H- (29.1%)
22. Passenger- H- (68.8%); V- (11.2%)
23. Cargo- V- 11.0%
24. Ancillary- H- (62.8%)
25. Other revenue- H- (93.9%)
26. Flying operations- H- (41.1%); V- 34.5%
27. Maintenance- H- (40.4%); V- 9.0%
28. Aircraft and traffic servicing- H- (63.6%)
29. Passenger service- H- (61.1%)
30. Reservation and sales- H- (70.8%)
31. General and administrative- H- 12.8%; V- 6.8%
32. Financing charges- H- (18.2%); V- 10.0%
33. Other charges-net – H- 1341.9%; V- 52.0%
34. Income tax expense - H- (581.8%); V- 14.0%
35. Net loss - H- 653.2%; V- (126.0%)
36. Total other comprehensive income- H- (116.1%)
37. Total comprehensive loss - H- 615.8%; V- (125.5%)
The causes for these material changes are explained in the management’s discussion and analysis
of results of operations and financial condition stated above.
ix. PAL and APC normally experience a peak in holiday travel during the months of January, April,
May, June and December. With the COVID-19 pandemic, this has not been the normal course of
business during the period.
Information on Independent Accountant and other Related Matters
(1) External Audit Fees and Services
a. Audit and Audit-Related Fees
The audit of the Company’s annual financial statements or services is normally provided by the
external auditor in connection with statutory and regulatory filings or engagements for 2020.
Year Ended Fees

December 31, 2020 =500,000 audit fee plus out-of pocket expenses
P
December 31, 2019 =475,000 audit fee and P
P =44,650 out-of pocket expenses
b. Tax Fees
The Company made no payments to its external auditors in tax fees.
c. All Other Fees
In 2020, the Company paid P

=1.05 million for consultancy services engagement.
35
d. The Audit Committee’s approval policies and procedures for the above services:
Upon recommendation and approval of the Audit Committee, the appointment of the external
auditor is being confirmed in the Annual Stockholders’ Meeting. On the other hand, financial
statements should be approved by the Board of Directors before its release.
Item 7. Financial Statements
See accompanying Index to Consolidated Financial Statements and Supplementary Schedules.
Item 8. Changes in and Disagreements with Accountants on Accounting and Financial

Disclosure
There are no changes in, and disagreements with the Company’s accountants on any accounting and
financial disclosure during the past two years ended December 31, 2020 or during any subsequent
interim period.
PART III - CONTROL AND COMPENSATION INFORMATION
Item 9. Directors and Executive Officers of the Registrant
1. Directors and Executive Officers
At present, the Company has nine (9) directors. Hereunder are the Company’s incumbent directors
and executive officers, their names, ages, citizenship, positions held, term of office as
director/officer, period served as director/officer, business experience for the past five years, and
other directorships held in other companies:
Name/ Current Affiliations and Business Term of Office

Age Citizenship
Position Experience in the last 5 years /Period Served
Lucio C. Tan/ 86 Filipino Chairman of Absolut Distillers, Inc., 1 year/ Served as
Chairman, Alliedbankers Insurance Corporation, Chairman since
President and Allianz PNB Life Insurance, Air 30 October 2000
Chief Executive Philippines Corporation, Asia Brewery,
Officer (CEO) Inc., Asian Alcohol Corporation, Basic
Holdings Corporation, Buona Sorte
Holdings, Inc., Eton Properties
Philippines, Inc., Fortune Tobacco
Corporation, Foremost Farms, Inc.,
Grandspan Development Corporation,
Himmel Industries, Inc., Lucky Travel
Corporation, Mabuhay Maritime
Express Transport, Inc., MacroAsia
Corporation, Philippine Airlines, Inc.,
PMFTC Inc., Progressive Farms, Inc.,
LT Group, Inc., Tanduay Distillers,
Inc., Tanduay Brands International,
Tangent Holdings Corporation, The
Charter House, Inc., Trustmark
Holdings Corporation, University of
the East, Zuma Holdings and
Management Corporation. He is also a
Director of Philippine National Bank.
36
Age Citizenship
Carmen K. Tan/ 80 Filipino Vice Chairman of LT Group, Inc. and 1 year/ Served as
Director Director of Air Philippines Director since
Corporation, Asia Brewery, Inc., Buona 23 October 2014
Sorte Holdings, Inc., Foremost Farms,
Inc., Dynamic Holdings, Ltd, Eton
City, Inc., Fortune Tobacco
Corporation, Himmel Industries, Inc.,
Lucky Travel Corporation, MacroAsia
Corporation, LT Group, Inc.,
Philippine National Bank, Philippine
Airlines, Inc., PMFTC, Inc.,
Progressive Farms, Inc., Tanduay
Distillers, Inc., Manufacturing Services
and Trade Corporation, Sipalay
Trading Corporation, Saturn Holdings,
Inc., Tangent Holdings Corporation,
Trustmark Holdings Corporation and
Zuma Holdings and Management
Corporation.
Lucio C. Tan III/ 27 Filipino Director, President and Chief Operating Served as
Director Officer of Tanduay Distillers, Inc., and Director since 17
Director of Air Philippines December 2019
Corporation, MacroAsia Corporation,
LT Group, Inc., and Philippine
Airlines, Inc.
Joseph T. Chua/ 63 Filipino Chairman of J.F. Rubber Philippines, Served as
Director Watergy Business Solutions, Inc., Director since 28
and Cavite Business Resources, Inc.; October 2019
Director/President and Chief Operating
Officer of MacroAsia Corp.;
Managing Director of Goodwind
Development Corporation (Guam);
Director/President of MacroAsia
Airport Services Corporation,
MacroAsia Air Taxi Services,
MacroAsia Catering Services, Inc.,
MacroAsia Properties Development
Corp. and MacroAsia Mining
Corporation.
Gilbert Gabriel F. 55 Filipino Director, President and Chief Operating Served as
Santa Maria/ Officer of Philippine Airlines, Inc. Director since
Director 2019
Ryuhei Maeda/ 67 Japanese Senior Adviser of ANA Holdings Inc.; 1 year/ served as
Director Director of All Nippon Airways Co., Director since 31
Ltd. May 2019
Johnip G. Cua/ 64 Filipino Former President of Procter & Gamble 1 year/ served as
Independent Philippines, Inc., currently the Independent
Director Chairman of the Board of the P&Gers Director since 23
Fund, Inc. and Xavier School, Inc., and October 2014
the Chairman & President of Taibrews
Corporation. He is an Independent
Director of BDO Private Bank,
37
Age Citizenship
PhilPlans First, Inc., Eton Properties
Philippines, Inc., Asia Brewery, Inc.,
Tanduay Distillers, Inc., MacroAsia
Corporation, MacroAsia Catering
Services, Inc., MacroAsia Airport
Services Corporation, LT Group, Inc.
and Philippine Airlines, Inc. He is also
a member of the Board of Directors of
Interbake Marketing Corporation,
Teambake Marketing Corporation,
Bakerson Corporation, Lartizan
Corporation, Alpha Alleanza
Manufacturing, Inc., and Allied
Botanical Corporation, and a member
of the Board of Trustees of Xavier
School Educational & Trust Fund.
Gregorio T. Yu/ 62 Filipino Chairman of the Board and President of 1 year/ served as
Independent Philequity Fund, Inc., Lucky Star Independent
Director Network Communications Director since 23
Corporation, and Domestic Satellite October 2014
Corporation of the Philippines;
Chairman of CATS Automobile Corp.,
American Motorcycles, Inc., and Auto
Nation Group, Inc.; Vice Chairman of
Sterling Bank of Asia Inc.; Director of
ISM Communications Corporation,
Unistar Credit and Finance
Corporation, CATS Asian Cars, Inc.,
Nexus Technologies, Inc., Jupiter
Systems, Inc., Wordtext Systems, Inc.,
Prople BPO, Yehey Corporation,
National Reinsurance Corp. of the
Philippines, e-Ripple Corporation,
Philippine Bank of Communications
Inc., and WSI Corporation; Director/
Treasurer of CMB Partners Inc.;
Independent Director of Philippine
Airlines, Inc., iRemit Inc., e-Business
Services, Inc., and Vantage Equities,
Inc.; Board Member of Ballet
Philippines, and Manila Symphony
Orchestra.
Ma. Cecilia L. 68 Filipino Corporate Secretary of Asia Brewery, Served as
Pesayco/ Inc., LT Group, Inc., Trustmark Corporate
Corporate Holdings Corporation, Zuma Holdings Secretary since
Secretary 11 February 2015
and Management Corporation. She is
likewise the Chief Legal Counsel of the
Tan Yan Kee Foundation.
Susan T. Lee/ 50 Filipino Chief Finance Officer of Trustmark Served as Chief
Chief Finance Holdings Corporation and Zuma Finance Officer
Officer Holdings and Management since
Corporation; VP-Assistant Chief 11 February 2015
38
Age Citizenship
Finance Officer of Tanduay Distillers,
Inc., and VP Finance for LT Group,
Inc.
(*Note: Unless otherwise indicated or qualified, the term “Director” refers to a regular director of the Corporation. Corporations in bold
font style are Listed Companies.)
2. Significant Employees
The Company is not dependent on the services of any one key personnel. It values all of its employees
and expects them to contribute significantly to its business.
3. Family Relationships
Family relationships exist among the directors and Management of the Company in the following
instances:
The Company’s Chairman, President and Chief Executive Officer (CEO), Dr. Lucio C. Tan, married
to Mrs. Carmen K. Tan, is the grandfather of Mr. Lucio C. Tan III and the father-in-law of Mr. Joseph
T. Chua.
Except for the foregoing, there are no other family relationships among the board members and
Management known to the registrant.
4. Pending Legal Proceedings (last 5 years)
None of the directors nor any of the executive officers of the Company has been, for a period covering
the past five (5) years, involved in any bankruptcy petition by or against any business of which such
person was a general partner or executive officer either at the time of the bankruptcy or within two
years prior to that time; any conviction by final judgment, in a criminal proceeding, domestic or
foreign, or being subject to a pending criminal proceeding, domestic or foreign, excluding traffic
violations and other minor offenses other than cases which arose out of the ordinary course of
business in which they may have been impleaded in their official capacity; being subject to any order,
judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent
jurisdiction, domestic or foreign, permanently or temporarily enjoining, barring suspending or
otherwise limiting his involvement in any type of business, securities, commodities or banking
activities; and being found by a domestic or foreign court of competent jurisdiction (in a civil action),
the Commission or comparable foreign body, or a domestic or foreign Exchange or other organized
trading market or self-regulatory organization, to have violated a securities or commodities law or
regulation, and the judgment has not been reversed, suspended, or vacated.
39
Item 10. Executive Compensation
i. CEO and Top Four (4) Compensated Executive Officers
A fixed basic monthly salary is provided for the Company’s Chairman and CEO, President and
other officers of the Company and shall continue to be given in 2021. The Company has no contract
with any of its executive officers.
ii. Directors and Executive Officers
The directors of the Company are entitled to a per diem of P=25,000.00 for their attendance in every
board meeting and stockholders’ meeting. Additionally, the Independent Directors are provided
monthly transportation and representation allowances of P=30,000.00 while other directors are given
the monthly directors’ allowance of P =30,000.00. Moreover, attendance at a Board Committee
meeting, of which he is a member, entitles the director to a per diem of P
=15,000.00.
Apart from the foregoing, the directors and executive officers of the Company receive no other
remuneration in cash or in kind. None of the directors and executive officers holds any outstanding
warrant or option.
Summary Compensation Table
Year Salary Bonus Others

CEO and two (2) Projected 2021 1,920,000 N/A 810,000
compensated executive Actual 2020 1,920,000 N/A 810,000
officers (see below) Actual 2019* 2,280,000 N/A 1,075,000
All other directors as a group Projected 2021 N/A N/A 5,035,000
unnamed Actual 2020 N/A N/A 5,275,000
Actual 2019 270,000 N/A 4,137,500
*CEO and three (3) compensated executive officers.
The following constitute the Company’s CEO and the two compensated executive officers as of
December 31, 2020 (on a consolidated basis):
1. Mr. Lucio C. Tan is the Chairman of the Board of Directors, President and CEO.
2. Ms. Susan T. Lee is the Chief Finance Officer.
3. Atty. Ma. Cecilia L. Pesayco is the Corporate Secretary.
a.) Standard Arrangements - Other than the stated salaries and wages and per diem of the
directors, there are no other standard arrangements to which the directors of the Company
are compensated, or are to be compensated, directly or indirectly, for any services provided
as a director, including any additional amounts payable for committee participation or
special assignments, for the last completed fiscal year and the ensuing year.
b.) Other Arrangements - None
c.) Employment contract or compensatory plan or arrangement - None
Warrants and Options Outstanding: Repricing
a.) There are no outstanding warrants or options held by the Company’s CEO, the named
executive officers, and all officers and directors as a group.
b.) This is not applicable since there are no outstanding warrants or options held by the
Company’s CEO, executive officers and all officers and directors as a group.
40
Item 11. Security Ownership of Certain Beneficial Owners and Management as of
December 31, 2020
1. Security Ownership of Certain Record and Beneficial Owners of more than 5%
Title of Name, address of Name of Citizenship No. of Shares Percent

class record owner and Beneficial Held
relationship with Owner and
Issuer Relationship
with Record
Owner
Common Trustmark Holdings N/A Filipino 8,930,733,710 76.92%
Corporation*
SMI Compound, C.
Raymundo Ave.,
Maybunga, Pasig City
(Stockholder)
Common ANA Holdings, Inc. N/A Japanese 1,103,042,933 9.5%
Shiodome City Centre,
1-5-2 Higashi-
Shimbashi, Minato-ku,
Tokyo, Japan, 105-7140
(Stockholder)
* Trustmark Holdings Corporation (Trustmark) is 60% owned by Buona Sorte Holdings, Inc. (BSHI) and 40% by Horizon
Global Investments, Ltd. (HGIL). BSHI is a domestic company while HGIL is a BVI company. The right to vote or direct the
voting or disposition of PHI’s shares held by Trustmark is lodged in the latter’s Board of Directors, the members of which are
Dr. Lucio C. Tan, Mrs. Carmen K. Tan, Ms. Shiela T. Pascual and Michael G. Tan. Dr. Lucio C. Tan is expected to be given
the proxy to vote the shares of Trustmark.
2. Security Ownership of Management as of December 31, 2020
Name of
Amount and Nature Percent
Title of Class Beneficial Position Citizenship
of Beneficial of Class
Owner
Ownership
Common Lucio C. Tan Chairman, 450 Filipino Nil
President R (direct)
and CEO
Common Carmen K. Tan Director 450 Filipino Nil
R (direct)
Common Lucio C. Tan III Director 450 Filipino Nil
R (direct)
Common Joseph T. Chua Director 225 Filipino Nil
R (direct)
Common Gilbert Gabriel F. Director 225 Filipino Nil
Santa Maria R (direct)
Common Ryuhei Maeda Director 1 Filipino Nil
R (direct)
Common Gregorio T. Yu Independent 225 Filipino Nil
Director R (direct)
Common Johnip G. Cua Independent 225 Filipino Nil
Director R (direct)
Total 2,251
Security ownership of all directors and officers as a group is 2,251 representing 0% of the
41
Company’s total outstanding capital stock.
3. Voting Trust Holders of 5% or More
The Company has no recorded stockholder holding more than 5% of the Company’s common stock
under a voting trust agreement.
4. Changes in Control
There are no arrangements which may result in a change in control of the Company.
Item 12. Certain Relationships and Related Transactions
In addition to Note 18 of the Notes to the Consolidated Financial Statements, the following are additional
relevant related party disclosures:
The Company’s cash and cash equivalents are deposited/placed with Philippine National Bank (the
“Bank”), an affiliate, at competitive interest rates. The Company also has a contract of lease of space
and stock transfer agency agreement with the Bank at prevailing rates. There is no preferential treatment
in any of its transactions with the Bank. There are no special risks or contingencies involved since the
transactions are done under normal business practice.
a) Business purpose of the arrangements:
The Company does business with related parties due to stronger ties based on trust and
confidence and easier coordination.
b) Identification of the related parties transaction business and nature of relationship:
Philippine National Bank Bank Deposits, Rental, Stock Transfer Services

MacroAsia Corporation Investments
c) Transaction prices are based on prevailing market rates.
d) Transactions have been fairly evaluated since the Company adheres to industry standards and
practices.
e) There are no any ongoing contractual or other commitments as a result of the arrangements.
There are no parties that fall outside the definition of “related parties” with whom the Company
or its related parties have a relationship that enables the parties to negotiate terms of material
transactions that may not be available from other, more clearly independent parties on an arm’s
length basis.
The Company has no transactions with promoters.
PART IV - CORPORATE GOVERNANCE
Item 13. Corporate Governance
This will be filed separately.
42
Item 14. Sustainability Report
Please refer to the attached Sustainability Report.
PART V - EXHIBITS AND SCHEDULES
Item 15. Exhibits and Reports on SEC Form 17-C
(a) Exhibits - The other exhibits, as indicated in the Index to Exhibits are either not applicable to the
Company or require no answer.
(b) Reports on SEC Form 17-C
SEC Form 17-C (Current Reports) which have been filed during the year are no longer filed as
part of the exhibits.
LIST OF ITEMS REPORTED UNDER SEC FORM 17-C

(from July 2020 to December 2020)
Date of Report Subject Matter Disclosed

February 10, 2020 Clarification of News Reports: “PAL’s P87-M Tax Refund Over
Fuel Imports Affirmed”
February 18, 2020 Philippine Airlines, Inc. (PAL) approved the increase of its
Authorized Capital Stock.
February 18, 2020 Change in Officers (Appointment of Dr. Lucio C. Tan as Chairman
and President)
February 18, 2020 Amendments to Articles of Incorporation
February 24, 2020 Clarification of News Reports: “MacroAsia to tap LT firms to
support Sangley financing”
March 2, 2020 Clarification of News Reports: “PAL ‘fighting for its future’ as
2019 losses hit P10.6B”
March 18, 2020 Information on the risks and impacts of the COVID-19 on the
business operations of the Company pursuant to the SEC
Memorandum dated March 12, 2020
April 1, 2020 Results of the Meeting of the Board of Directors held on 01 April
2020
May 21, 2020 Clarification of News Reports: “Lucio Tan admits PAL on course
for crash landing even after infusing P16B in last 5 months”
May 22, 2020 Clarification of News Reports: "PAL may lay off more personnel"
July 21, 2020 Material information on the Nominees to the Board
July 23, 2020 Results of Annual Stockholders' Meeting
July 24, 2020 Results of Organizational Meeting of Board of Directors
July 24, 2020 Amendments to Articles of Incorporation
November 25, 2020 Clarification of News Reports: “Philippine Airlines plans to seek
court protection from creditors”
The major resolutions approved by the Board in 2020 from the last Annual Stockholders’ Meeting
to the present are as follows:
Date/ Type of Meeting Action/s Taken

July 23, 2020 Amendment of the Company’s Articles of Incorporation to
increase the number of Directors from Nine (9) to Eleven (11).
43
44
PAL HOLDINGS, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND SUPPLEMENTARY SCHEDULES
SEC FORM 17-A
Page No.
CONSOLIDATED FINANCIAL STATEMENTS
Statement of Management’s Responsibility for Financial Statements 46-47

Cover Sheet for Audited Consolidated Financial Statements 48
Independent Auditor’s Report 49-57
Consolidated Statements of Financial Position as of December 31, 2020 and 2019 58
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2020,
2019 and 2018 59
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2020, 2019 60-61
and 2018
Consolidated Statements of Cash Flows for the Years Ended December 31, 2020, 2019 and 62-63
2018
Notes to Consolidated Financial Statements 64-148
SUPPLEMENTARY SCHEDULES
Independent Auditor’s Report on the Supplementary Schedules 149
A. Financial Assets 150

B. Amounts Receivable from Directors, Officers, Employees, Related Parties, and
Principal Stockholders (Other than Related Parties) 151
C. Amounts Receivable from Related Parties which are Eliminated during the
Consolidation of Financial Statements 152
D. Intangible Assets and Other Assets 153
E. Long-term Obligations 154
F. Indebtedness to Related Parties 155
G. Guarantees of Securities of Other Issuers 156
H. Capital Stock 157
I. Index to Exhibits *
OTHER SCHEDULES
Reconciliation of Retained Earnings Available for Dividend Declaration (Annex 68-D) 158
Independent Auditor’s Report on Components of Financial Soundness Indicators 159
Schedule of Financial Soundness Indicators (Annex 68-E) 160
Corporate Organizational Chart 161
* These schedules, which are required by Part IV(e) of SRC Rule 68, have been omitted because
they are either not required, not applicable or the information required to be presented is included
in the Group’s financial statements.
45
46
47
COVER SHEET
for
AUDITED FINANCIAL STATEMENTS
SEC Registration Number

P W – 9 4
COMPANY NAME
P A L H O L D I N G S , I N C .
( A S u b s i d i a r y o f T r u s t m a r k
H o l d i n g s C o r p o r a t i o n )
A N D S U B S I D I A R I E S
PRINCIPAL OFFICE ( No. / Street / Barangay / City / Town / Province )

8 t h F l o o r , P N B F i n a n c i a l
C e n t e r , P r e s i d e n t D i o s d a d o
M a c a p a g a l A v e . , C C P C o m p l e x ,
P a s a y C i t y
Form Type Department requiring the report Secondary License Type, If Applicable
A A C F S C R M D N / A
COMPANY INFORMATION
Company’s Email Address Company’s Telephone Number Mobile Number
palholdingsinc2015@gmail.com (02) 8816-3451 N/A
No. of Stockholders Annual Meeting (Month / Day) Fiscal Year (Month / Day)
6,453 Last Thursday of May 12/31
CONTACT PERSON INFORMATION

The designated contact person MUST be an Officer of the Corporation
Name of Contact Person Email Address Telephone Number/s Mobile Number
Susan T. Lee susan.lee@tanduay.com (02) 8816-3451 N/A
CONTACT PERSON’s ADDRESS
7/F Allied Bank Center, 6754 Ayala Avenue, Makati City
NOTE 1 : In case of death, resignation or cessation of office of the officer designated as contact person, such incident shall be reported to the Commission within
thirty (30) calendar days from the occurrence thereof with information and complete contact details of the new contact person designated.
2 : All Boxes must be properly and completely filled-up. Failure to do so shall cause the delay in updating the corporation’s records with the Commission
and/or non-receipt of Notice of Deficiencies. Further, non-receipt of Notice of Deficiencies shall not excuse the corporation from liability for its deficiencies.
48 *SGVFS162312*
SyCip Gorres Velayo & Co. Tel: (632) 8891 0307
6760 Ayala Avenue Fax: (632) 8819 0872
1226 Makati City ey.com/ph
Philippines
INDEPENDENT AUDITOR’S REPORT
The Stockholders and the Board of Directors

PAL Holdings, Inc.
Opinion
We have audited the consolidated financial statements of PAL Holdings, Inc. and its subsidiaries
(the Group), which comprise the consolidated statements of financial position as at December 31, 2020
and 2019, and the consolidated statements of comprehensive income, consolidated statements of changes
in equity and consolidated statements of cash flows for each of the three years in the period ended
December 31, 2020, and notes to the consolidated financial statements, including a summary of
significant accounting policies.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects,
the consolidated financial position of the Group as at December 31, 2020 and 2019, and its consolidated
financial performance and its consolidated cash flows for each of the three years in the period ended
December 31, 2020 in accordance with Philippine Financial Reporting Standards (PFRSs).
Basis for Opinion
We conducted our audits in accordance with Philippine Standards on Auditing (PSAs). Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit
of the Consolidated Financial Statements section of our report. We are independent of the Group in
accordance with the Code of Ethics for Professional Accountants in the Philippines (Code of Ethics)
together with the ethical requirements that are relevant to our audit of the consolidated financial
statements in the Philippines, and we have fulfilled our other ethical responsibilities in accordance with
these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Material Uncertainty Related to Going Concern

We draw attention to Note 2 to the consolidated financial statements, Status of Operations, Recovery
Plan, Key Initiatives to Support the Recovery Plan and Material Uncertainty Related to Going Concern,
which indicate that the Group reported consolidated total comprehensive loss of P =73.00 billion for the
year ended December 31, 2020 which increased the deficit to P =88.97 billion and resulted to capital
deficiency attributable to the equity holders of the Parent Company amounting to = P74.05 billion as of
December 31, 2020. In addition, the Group’s current liabilities exceeded the current assets by
=164.02 billion as of December 31, 2020. The Group also has long-term obligations which comprised
P
mainly of secured loans and lease liabilities amounting to =P32.57 billion and =
P152.03 billion as of
December 31, 2020, respectively. The Group’s liquidity situation became more critical in 2020 and 2021
due to severely weak passenger sales and revenue as an adverse effect of the COVID-19 pandemic.
49 *SGVFS162312*
A member firm of Ernst & Young Global Limited
-2-
The COVID-19 outbreak and the measures taken by the Philippine and foreign governments have caused
disruptions to Philippine Airlines, Inc. (PAL)’s passenger operations, resulting to temporary suspension
and limited operations of its flights both for domestic and international routes. Consequently, the decline
in revenue and cash inflows has put significant strain on the Group’s liquidity position and on its
compliance with certain loan covenants. The Group has not made principal and/or interest payments due
in respect of its long-term obligations since April 2020, resulting in breach of certain loan covenants and
default provisions in the lease and loan agreements. Consequently, the noncurrent portion of the long-
term obligations that are deemed due and demandable are classified and presented as current liabilities as
of December 31, 2020.
Due to the difficulty in sourcing additional financing, on September 3, 2021, PAL proceeded with the
filing of voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code in the United States
Bankruptcy Court for the Southern District of New York to be authorized to continue to operate its
business and manage its operations as a debtor-in-possession pursuant to Sections 1107 and 1108 of the
Bankruptcy Code and pursue confirmation of a pre-arranged plan of reorganization to effect the
restructuring contemplated by various Restructuring Support Agreements (“RSAs”).
On September 24, 2021, PAL filed with the Regional Trial Court, National Capital Judicial Region,
Branch CXI (111), Pasay City, the local court, the petition seeking recognition of foreign proceedings in
relation to the Chapter 11 case. On October 22, 2021, the local court granted PAL’s petition and rendered
judgment (i) recognizing the Chapter 11 proceeding; and (ii) giving force and effect to the Chapter 11
proceeding and all court orders issued by the US Court in connection with such foreign proceeding,
among others.
On September 30, 2021, the US Court issued an order authorizing PAL to obtain post-petition financing
consisting of an aggregate amount of $505.0 million comprising (a) a first lien secured Tranche A multi-
draw term loan facility (the “Tranche A DIP Facility) in an aggregate amount of $250 million from Buona
Sorte Holdings, Inc., $20.0 million of which has been drawn on September 13, 2021 before the approval
of the order; and (b) a second lien secured Tranche B multi-draw term loan facility (the “Tranche B DIP
Facility” and, together with the Tranche A DIP Facility, the “DIP Facility”) in an aggregate principal
amount of $255.0 million from the Parent Company. The Tranche A DIP Facility and Tranche B DIP
facility were fully drawn on October 6, 2021 and November 3, 2021, respectively. The proceeds from the
DIP Facility were used to meet its obligations arising during the Chapter 11 proceedings, including its
administration, and as working capital to operate its business.
On October 13, 2021, PAL filed the proposed Chapter 11 Plan of Reorganization of Philippine Airlines,
Inc. (the “Plan”). The objective of the Plan is to reduce near-term payments of obligations to allow
sufficient liquidity to stabilize the financial condition of the Group and to restore the ability of the Group
to service its financial obligations, as restructured, on an on-going basis. The Plan included the reduction
of its fleet to align its capacity with the projected recovery of demand.
As a consequence of this post-petition financing and in view of the consent of majority of all the creditors
and lessors (in monetary terms), on December 17, 2021, the U.S. court confirmed its approval of the Plan.
Further, the US court order stated that PAL may take any action free of any restrictions of the US
Bankruptcy Code or Bankruptcy Rules and in all respects as if there were no pending cases under any
chapter or provision of the Bankruptcy Code, except as expressly provided in the Plan.
50 *SGVFS162312*
-3-
On December 31, 2021, PAL filed a Notice of Effective Date and Entry Order (i) Confirming the
Debtor’s Chapter 11 Plan of Reorganization and (ii) Granting Related Relief before the US Court. The
notice states that all conditions precedent to the Effective Date set forth in Section 9.2, Conditions
Precedent to Effective Date, of the Plan have been satisfied or waived pursuant to Section 9.3, Waiver of
Condition Precedent, of the Plan, such that the Plan was substantially consummated, and the Effective
Date occurred, on December 31, 2021.
The contents of the Plan have been described in Notes 2 and Note 30, Events After the Reporting Date, to
the consolidated financial statements.
The scale and duration of the impact of COVID-19 outbreak as well as the impact it will have on the
Group’s earnings, cash flows and financial condition remain uncertain. Further, there can be no
assurance, despite the Group’s implementation of the Plan, that the Group will achieve profitability or
positive cash flows. These conditions indicate that material uncertainties exist that may cast significant
doubt on the Group’s ability to continue as a going concern. Our opinion is not modified in respect of this
matter.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the consolidated financial statements of the current period. These matters were addressed in the
context of our audit of the consolidated financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters. For each matter below, our
description of how our audit addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
Consolidated Financial Statements section of our report, including in relation to these matters.
Accordingly, our audit included the performance of procedures designed to respond to our assessment of
the risks of material misstatement of the consolidated financial statements. The results of our audit
procedures, including the procedures performed to address the matters below, provide the basis for our
audit opinion on the accompanying consolidated financial statements.
Recognition and measurement of revenue and unearned transportation revenue
For the year ended December 31, 2020, the revenue from passenger and cargo sales amounted to
=41.86 billion and =
P P9.41 billion, respectively, while the unearned transportation revenue amounted to
=8.72 billion as of December 31, 2020.
P
We considered the recognition and measurement of revenue and unearned transportation revenue as a key
audit matter because of the significant amounts involved, large volumes of data being processed and
complexity in determining the amount of revenue to be recognized for flown flights. The Group also uses
complex information technology system to process large volumes of data and determine the timing and
the amount of revenue to be recognized for each flight, which involves exchanges of information with the
industry systems and partner airlines, and also to track the issuance and subsequent redemption of the
awards under the frequent flyer program. Further, the determination of the timing for recognition of
unused tickets and quantification of revenue allocable to the frequent flyer program require significant
judgment and estimation.
51 *SGVFS162312*
-4-
Refer to Notes 3 and 4 to the consolidated financial statements for the relevant accounting policies and a
discussion of significant judgments and estimates.
Audit response
With the involvement of our internal specialist, we obtained an understanding of the Group’s revenue
recognition process and tested its information technology system general controls such as user access and
program change, and the application controls over the recognition and measurement of revenue and
unearned transportation revenue process. We selected sample journal entries related to revenue
recognition and inspected the underlying documentation. We also performed analytical procedures on the
Group’s passenger and cargo revenue and unearned transportation revenue.
For the estimate of the deferred revenue pertaining to the frequent flyer program, we compared the
expected redemption rate to the actual redemption rates in prior years and tested the allocated unit fair
value of the miles by comparing with the prices for third-party frequent flyer miles sales and flight
redemption values.
Accounting for aircraft leases
We considered the accounting for aircraft leases as a key audit matter because the Group has a high
volume of lease agreements, the recorded amounts are material to the consolidated financial statements
and significant judgment and estimation are involved in determining whether or not the contract contains
a lease, determining the lease term, including evaluating whether the Group is reasonably certain to
exercise options to extend or terminate the lease or to purchase the underlying asset, and determining the
incremental borrowing rate.
discussion of significant judgments, and Notes 15, 18 and 24 for the detailed disclosures on the leased
aircraft under lease arrangements.
Audit response
We obtained an understanding of the Group’s process in accounting for leases, including the maintenance
of lease contracts and calculation of lease liability, right-of-use assets and the related expenses and
deferred income taxes. We selected samples of new lease contracts from the Master Lease Schedule and
read their contractual terms and conditions. We traced these selected contracts to the lease calculation
prepared by management. We tested the underlying lease data used (e.g., lease payments, lease term) by
agreeing the terms of the selected contracts with the lease calculation. For selected lease contracts with
renewal and/or termination option, we evaluated management’s assessment on whether it is reasonably
certain that the Group will exercise the option to renew or not exercise the option to terminate. We tested
the parameters used in the determination of the incremental borrowing rate by reference to market data.
We test-computed the lease calculations prepared by management.
We reviewed the disclosures related to leases, based on the requirements of PFRS 16.
52 *SGVFS162312*
-5-
Accounting for aircraft and related equipment
The Group has aircraft and related equipment as at December 31, 2020 with a carrying amount of
=163.83 billion. In accounting for these assets, the Group estimated their estimated useful lives, residual
P
values and any potential impairment, based on the fair value of the assets and the cash flows they
generate. The lower market values of certain aircraft assets as compared with their respective carrying
amounts, the continuing earnings volatility, and the disruptions caused by the (COVID-19) pandemic to
the Group’s passenger operations have exposed the Group to potential asset impairment.
We considered the accounting for aircraft and related equipment subsequent to initial recognition as a key
audit matter because the changes to the estimated useful lives and/or residual values of the Group’s fleet
and potential recognition of impairment loss, taking into account the impact of the COVID-19 pandemic,
could have a material impact on the financial position and financial performance of the Group for the
year. Further, the recoverable amounts of the individual assets or cash generating units (CGU) to which
these assets belong, the determination of useful lives and residual values, and the assumptions used for
the impairment assessment involve significant judgment and estimation.
discussion of significant judgment and estimates, and Note 10 for the detailed disclosures about the
carrying amounts of the aircraft and related equipment.
Audit response
We obtained an understanding of the Group’s process and controls over estimation of the useful lives of
aircraft. We assessed management’s estimates of the useful lives and residual values considering the
Group’s fleet plan, recent aircraft transactions, and contractual rights. We also considered the
developments in the airline industry and compared the estimated useful lives used by the Group with
comparable airlines.
We evaluated the potential indicators of impairment that would require the impairment testing of the
individual assets and the cash generating units (CGUs). With the involvement of our internal specialist,
we evaluated the key assumptions used to estimate the discounted cash flows of the CGU, which include
the forecasted revenues, operating costs, discount rates, and impact of the COVID-19 pandemic based on
our understanding of the Group’s business plan and compared these assumptions to the relevant market
data and to historical results, as applicable.
Classification and measurement of repairs and maintenance costs
Total aircraft-related repairs and maintenance costs recognized in profit or loss for the year ended
December 31, 2020 amounted to = P11.99 billion, while the accrued repairs and maintenance costs as at
December 31, 2020 amounted to = P13.79 billion.
53 *SGVFS162312*
-6-
We considered the classification and measurement of repairs and maintenance costs as a key audit matter
because of the significant judgment involved in assessing whether a particular repair should be capitalized
or expensed, and the inherent risks in assessing the variable factors in order to estimate the repairs and
maintenance costs at the cut-off date.
discussion of significant estimates, and Notes 10, 14 and 16 for the detailed disclosures on the repairs,
maintenance and overhaul cost and related accrual.
Audit response
We obtained an understanding of the Group’s repairs and maintenance program and tested the relevant
key controls over the relevant processes. We selected sample transactions related to repairs, maintenance
and overhauls, and inspected the underlying documentation. We evaluated the classification of repairs,
maintenance and overhauls based on their nature and by considering the Company’s capitalization and
expensing policy. We obtained the maintenance agreements with key maintenance service providers and
tested the amounts accrued against the related open work orders.
Recognition of deferred income tax assets
The Group recognized deferred income tax assets amounting to =

P41.54 billion, arising from certain
deductible temporary differences.
We considered the recognition of deferred income tax assets as a key audit matter because of the
significant judgment and estimation involved in assessing the probability and level of future taxable
profits that will allow the deferred income tax assets to be utilized, including the impact of the COVID-19
pandemic.
discussion of significant judgment and estimates, and Note 22 for the detailed disclosures on deferred
income tax assets.
Audit Response
We evaluated management’s assumptions and estimates, which include the forecasted revenues, operating
costs and timing of reversal of temporary differences, in relation to the likelihood of generating sufficient
future taxable profits based on our understanding of the Group’s business plan, including the impact of
the COVID-19 pandemic, and compared these assumptions to relevant market data and historical results,
as applicable.
54 *SGVFS162312*
-7-
Other Matter
We have previously issued our auditor’s report dated May 26, 2021 which contains a disclaimer of
opinion on the Group’s consolidated financial statements as at and for the year ended December 31, 2020
because we were unable to obtain sufficient appropriate evidence to conclude as to whether the use of the
going concern assumption in preparing those financial statements is appropriate as the ultimate outcome
of the negotiations with the lessors and creditors, the application and approval of the planned financial
restructuring proceedings and the arrangements to secure additional financing have yet to be concluded as
of that date. As disclosed in Note 1 to consolidated financial statements, the Group reissued its 2020
consolidated financial statements to include additional disclosures in Notes 2 and 30 to the consolidated
financial statements in relation to the progress of PAL’s financial restructuring process. These additional
disclosures include, among others, the Group’s completed negotiation with its creditors, lessors and
maintenance providers through the RSAs, the confirmation of the US Court of the Plan and the key
initiatives to support the Plan. In view of the US Court’s confirmation of the Plan, along with other
events and current implementation of the Plan, our report on these 2020 reissued consolidated financial
statements has been updated.
Other Information
Management is responsible for the other information. The other information comprises the information
included in the SEC Form 20-IS (Definitive Information Statement), SEC Form 17-A and Annual Report
for the year ended December 31, 2020 (but does not include the consolidated financial statements and our
auditor’s report thereon), which we obtained prior to the date of this auditor’s report.
Our opinion on the consolidated financial statements does not cover the other information and we will not
express any form of assurance conclusion thereon.
In connection with our audits of the consolidated financial statements, our responsibility is to read the
other information identified above and, in doing so, consider whether the other information is materially
inconsistent with the consolidated financial statements or our knowledge obtained in the audits, or
otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of
this auditor’s report, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the Consolidated
Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with PFRSs, and for such internal control as management determines is
necessary to enable the preparation of consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless management either intends to liquidate the Group or to
cease operations, or has no realistic alternative but to do so.
55 *SGVFS162312*
-8-
Those charged with governance are responsible for overseeing the Group’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with PSAs will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of these consolidated financial statements.
As part of an audit in accordance with PSAs, we exercise professional judgment and maintain
professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of
not detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the consolidated financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditor’s report. However, future events or conditions may cause the Group to cease
to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements,
including the disclosures, and whether the consolidated financial statements represent the underlying
transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the consolidated financial statements.
We are responsible for the direction, supervision and performance of the audit. We remain solely
responsible for our audit opinion.
56 *SGVFS162312*
-9-
We communicate with those charged with governance regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies in internal
control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with those charged with governance, we determine those matters that
were of most significance in the audit of the consolidated financial statements of the current period and
are therefore the key audit matters. We describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse consequences of
doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor’s report is Catherine E. Lopez.
SYCIP GORRES VELAYO & CO.
Catherine E. Lopez
Partner
CPA Certificate No. 86447
Tax Identification No. 102-085-895
BOA/PRC Reg. No. 0001, August 25, 2021, valid until April 15, 2024
SEC Partner Accreditation No. 0468-AR-4 (Group A)
February 19, 2019, valid until February 18, 2022
SEC Firm Accreditation No. 0012-FR-5 (Group A)
November 6, 2018, valid until November 5, 2021
SEC Firm Accreditation No. 0001-SEC (Group A)
Valid to cover audit of 2021 to 2025 financial statements of SEC covered institutions
BIR Accreditation No. 08-001998-065-2020, December 3, 2020, valid until December 2, 2023
PTR No. 8854315, January 3, 2022, Makati City
January 31, 2022
57 *SGVFS162312*
PAL HOLDINGS, INC.
(A Subsidiary of Trustmark Holdings Corporation)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Amounts in Thousands)
December 31
2020 2019
ASSETS
Current Assets
Cash and cash equivalents (Notes 5 and 18) P2,357,647
= P15,104,012
=
Receivables (Notes 4, 6, 15 and 18) 18,628,836 20,033,542
Expendable parts, fuel, materials and supplies (Notes 4 and 7) 3,720,111 5,121,004
Other current assets (Notes 5, 8 and 27) 7,488,447 5,825,454
32,195,041 46,084,012
Assets held for sale (Notes 4 and 10) 115,255 1,723,634
Total Current Assets 32,310,296 47,807,646
Noncurrent Assets
Property and equipment (Notes 4, 10, 15, 18, 23 and 24):
At cost 174,343,951 236,323,500
At appraised values 1,000,702 1,157,359
Investment properties (Notes 4 and 11) 1,577,373 3,512,538
Deferred income tax assets - net (Notes 4 and 22) – 5,023,919
Other noncurrent assets (Notes 5, 12, 18, 24 and 27) 18,667,042 24,004,518
Total Noncurrent Assets 195,589,068 270,021,834
TOTAL ASSETS =227,899,364
P =317,829,480
P
LIABILITIES AND EQUITY

Current Liabilities
Notes payable (Notes 13 and 18) P11,381,451
= P18,529,878
=
Accounts payable (Note 18) 18,293,324 15,159,438
Accrued expenses and other current liabilities (Notes 4, 13, 14, 18 and 27) 38,040,216 23,028,026
Unearned transportation revenue (Note 4) 8,717,088 16,164,388
Current portion of long-term obligations (Notes 4, 15, 18 and 24) 119,900,330 29,712,836
Total Current Liabilities 196,332,409 102,594,566
Noncurrent Liabilities
Long-term obligations - net of current portion (Notes 4, 15, 18 and 24) 64,702,458 179,700,550
Accrued employee benefits (Notes 4 and 21) 11,626,117 12,540,206
Reserves and other noncurrent liabilities (Notes 4, 10, 16, 18 and 27) 20,939,412 18,096,567
Deferred income tax liabilities - net (Note 22) 2,405,523 –
Total Noncurrent Liabilities 99,673,510 210,337,323
Total Liabilities 296,005,919 312,931,889
Equity (Capital Deficiency)
Capital stock (Notes 1 and 17) 9,799,753 9,799,753
Additional paid-in capital (Note 17) 3,010 3,010
Other equity reserves (Note 9) 1,629,881 1,629,881
Other components of equity (Note 19) 3,484,689 2,300,618
Deficit (Note 17) (88,966,677) (17,215,831)
Treasury stock - at cost (Note 17) (25) (25)
Capital Deficiency Attributable to Equity Holders of the Parent Company (74,049,369) (3,482,594)
Non-controlling Interests (Note 9) 5,942,814 8,380,185
Total Equity (Capital Deficiency) (68,106,555) 4,897,591
TOTAL LIABILITIES AND EQUITY =227,899,364
P =317,829,480
P
See accompanying Notes to Consolidated Financial Statements.
58 *SGVFS162312*
PAL HOLDINGS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Amounts in Thousands, Except Loss Per Share)
Years Ended December 31

2020 2019 2018
REVENUE
Passenger (Note 4) =41,860,117
P =134,292,006
P =128,910,320
P
Cargo (Note 4) 9,413,430 9,375,035 10,216,876
Ancillary (Note 4) 3,979,952 10,698,687 11,261,792
Others (Note 18) 10,467 171,003 92,370
55,263,966 154,536,731 150,481,358
EXPENSES (Note 20)
Flying operations (Note 18) 48,427,882 82,178,379 86,896,254
Maintenance (Notes 4 and 18) 12,435,836 20,854,392 20,972,885
Aircraft and traffic servicing (Note 18) 7,176,579 19,726,567 19,546,341
Passenger service (Note 18) 5,077,056 13,065,319 13,311,033
Reservation and sales 3,195,859 10,939,525 10,864,513
General and administrative (Note 6) 5,527,292 4,899,429 4,874,637
81,840,504 151,663,611 156,465,663
OTHER INCOME (CHARGES) - NET
Financing charges (Notes 13, 15, 16 and 18) (9,843,926) (12,030,520) (5,268,446)
Other income (charges) - net (Notes 5, 7, 10, 12, 16,
18, 24 and 26) (29,449,659) (2,042,474) 3,822,972
(39,293,585) (14,072,994) (1,445,474)
LOSS BEFORE INCOME TAX (65,870,123) (11,199,874) (7,429,779)
INCOME TAX BENEFIT (EXPENSE) (Note 22) (7,213,637) 1,497,158 3,722,221
NET LOSS (73,083,760) (9,702,716) (3,707,558)
OTHER COMPREHENSIVE INCOME (LOSS)
(Note 19)
Other comprehensive income (loss), net of deferred
income tax effect 79,981 (496,238) 864,153
TOTAL COMPREHENSIVE LOSS (P
=73,003,779) (P
=10,198,954) (P
=2,843,405)
Net income (loss) attributable to:
Equity holders of the Parent Company (P
=71,809,963) (P
=10,310,901) (P
=4,330,430)
Non-controlling Interests (Note 9) (1,273,797) 608,185 622,872
(P
=73,083,760) (P
=9,702,716) (P
=3,707,558)
Total comprehensive income (loss) attributable to:
Equity holders of the Parent Company (P
=70,521,898) (P
=11,245,109) (P
=3,666,048)
Non-controlling Interests (Note 9) (2,481,881) 1,046,155 822,643
(P
=73,003,779) (P
=10,198,954) (P
=2,843,405)
Basic/Diluted Loss Per Share*
Computed based on Net Loss (P
=6.1847) (P
=0.8880) (P
=0.3730)
Computed based on Total Comprehensive Loss (P
=6.0737) (0.9685) (0.3157)
*Computed using the weighted average number of issued and outstanding shares of stock of 11,610,978,242, for the years ended December 31,
2020, 2019 and 2018 (see Note 17).
59 *SGVFS162312*
PAL HOLDINGS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2020, 2019 AND 2018
Other Components of Equity

Net Changes in
Fair Values of
Financial Assets
at Fair Value Remeasurement
Through Other Revaluation Gains (Losses)
Comprehensive Increment- on Defined
Income Net of Benefit Plan -
Additional Effect of (FVTOCI) -Net Deferred Net of Deferred Total Equity
Paid-In Change Cumulative of Deferred Income Tax Income Tax Treasury Attributable to Non-
Capital in Translation Income Tax Effect Effect Stock - the Equity Controlling
Capital Stock (Notes 17 Other Equity Ownership Adjustment Effect (Notes 10 (Notes 19 Deficit At Cost Holders of Interest
(Note 17) and 18) Reserves Interest (Note 27) (Notes 12 and 19) and 19) and 21) Subtotal (Note 17) (Note 17) the Parent (Note 9) Total
BALANCES AT JANUARY 1, 2018 = 9,799,006 P

P = 25,339,985 = 225,637
P (P
=7,641) = 894,304
P = 1,836,964
P = 710,331
P (P
=748,207) =
P2,685,751 (P
=28,036,918) (P
=25) = 10,013,436
P P
= 5,900,314 P
= 15,913,750
Net income for the year – – – – – – – – – (4,330,430) – (4,330,430) 622,872 (3,707,558)
Other comprehensive income (loss) (Note 19) – – – – (28,680) (65,446) – 758,509 664,383 – – 664,383 199,770 864,153
Total comprehensive loss for the year – – – – (28,680) (65,446) – 758,509 664,383 (4,330,430) – (3,666,047) 822,642 (2,843,405)
Acquisition of non-controlling interest of a
subsidiary (Note 9) – – 1,355,924 – – – – – – – – 1,355,924 (3,766,990) (2,411,066)
Acquisition of additional interest in a subsidiary
through a share swap transaction 747 3,010 – (3,127) 90 – 72 (76) (3,041) – – 716 (732) (16)
Equity restructuring - partial wipe out of deficit
against additional paid-in capital – (25,339,985) – – – – – – – 25,339,985 – – – –
Net effect of transfer of portion of revaluation
increment in property realized through sale
and depreciation, net of deferred income tax
and foreign exchange adjustment – – – – – – (39,301) – (39,301) 66,872 – 27,571 301 27,872
747 (25,336,975) 1,355,924 (3,127) 90 – (39,229) (76) (42,342) 25,406,857 – 1,384,211 (3,767,421) (2,383,210)
BALANCES AT DECEMBER 31, 2018 = 9,799,753

P = 3,010
P P
= 1,581,561 (P
=10,768) = 865,714
P = 1,771,518
P = 671,102
P = 10,226
P P
= 3,307,792 (P
=6,960,491) (P
=25) = 7,731,600
P =
P2,955,535 P
= 10,687,135
60 *SGVFS162312*
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Other Components of Equity

Net Changes in
Fair Values of
Financial Assets
at Fair Value Remeasurement
Through Other Revaluation Gains (Losses)
Comprehensive Increment- on Defined
Income Net of Benefit Plan -
Additional Effect of (FVTOCI) -Net Deferred Net of Deferred Total Equity
Paid-In Change Cumulative of Deferred Income Tax Income Tax Treasury Attributable to Non-
Capital in Translation Income Tax Effect Effect Stock - the Equity Controlling
Capital Stock (Notes 17 Other Equity Ownership Adjustment Effect (Notes 10 (Notes 19 Deficit At Cost Holders of Interest
(Note 17) and 18) Reserves Interest (Note 27) (Notes 12 and 19) and 19) and 21) Subtotal (Note 17) (Note 17) the Parent (Note 9) Total
BALANCES AT JANUARY 1, 2019 = 9,799,753

P = 3,010
P P
= 1,581,561 (P
=10,768) = 865,714
P = 1,771,518
P = 671,102
P = 10,226 P
P = 3,307,792 (P
=6,960,491) (P
=25) P7,731,600
= =
P2,955,535 P
= 10,687,135
Net income for the year – – – – – – – – – (10,310,901) – (10,310,901) 608,185 (9,702,716)
Other comprehensive income (loss) (Note 19) – – – – (291,745) (57,137) 80,748 (666,074) (934,208) – – (934,208) 437,970 (496,238)
Total comprehensive income (loss) for the year – – – – (291,745) (57,137) 80,748 (666,074) (934,208) (10,310,901) – (11,245,109) 1,046,155 (10,198,954)
Disposal of partial interest in a subsidiary (Note
9) – – 48,320 – – – – – – – – 48,320 4,378,685 4,427,005
and foreign exchange adjustment – – – – – – (72,966) – (72,966) 55,561 – (17,405) (190) (17,595)
– – 48,320 – – – (72,966) – (72,966) 55,561 – 30,915 4,378,495 4,409,410
BALANCES AT DECEMBER 31, 2019 9,799,753 3,010 1,629,881 (10,768) 573,969 1,714,381 678,884 (655,848) 2,300,618 (17,215,831) (25) (3,482,594) 8,380,185 4,897,591
Net income for the year – – – – – – – – – (71,809,963) – (71,809,963) (1,273,797) (73,083,760)
Other comprehensive income (loss) (Note 19) – – – – 2,247,679 (953,025) 46,016 (52,605) 1,288,065 – – 1,288,065 (1,208,084) 79,981
Total comprehensive income (loss) for the year – – – – 2,247,679 (953,025) 46,016 (52,605) 1,288,065 (71,809,963) – (70,521,898) (2,481,881) (73,003,779)
Disposal of partial interest in a subsidiary (Note
9) – – – – – – – – – – – 45,000 45,000
and foreign exchange adjustment – – – – – – (103,994) – (103,994) 59,117 – (44,877) (490) (45,367)
– – – – – – (103,994) – (103,994) 59,117 – (44,877) 44,510 (367)
BALANCES AT DECEMBER 31, 2020 = 9,799,753

P = 3,010
P = 1,629,881
P (P
=10,768) = 2,821,648
P = 761,356
P = 620,906
P (P
=708,453) = 3,484,689
P (P
=88,966,677) (P
=25) (P
=74,049,369) = 5,942,814 (P
P =68,106,555)
61 *SGVFS162312*
PAL HOLDINGS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

2020 2019 2018
CASH FLOWS FROM OPERATING ACTIVITIES

Loss before income tax (P
= 65,870,123) (P
=11,199,874) (P
=7,429,779)
Adjustments for:
Depreciation and amortization (Note 10) 25,853,203 25,736,640 8,240,959
Provision for impairment loss - net (Notes 10 and 11) 32,824,745 1,033,703 629,156
Income on manufacturers’ credits (Note 24) (29,726) (236,622) (756,164)
Financing charges (Notes 13, 15, 16 and 18) 9,844,505 12,030,520 5,047,741
Interest income (Notes 5 and 12) (868,796) (399,838) (362,554)
Fair value changes on derivatives (Note 20) 1,783,334 (500,978) 920,022
Unrealized foreign exchange loss (gain) - net (1,064,491) 1,450,926 (402,726)
Movement in accrued employee benefits (Note 21) (874,385) 878,757 1,284,039
Gains on disposal of property and equipment and
others (Note 10) (1,663,875) (89,527) (55,954)
Amortization of deferred lease charges (Note 12) – – 201,116
Provision (reversal of provision) for litigations, asset
retirement obligation (ARO) and other noncurrent
liabilities - net (Note 16) (22,833) (64,198) (3,008,884)
Dividend income (Note 12) – (22,880) –
Operating income (loss) before working capital changes (88,442) 28,616,629 4,306,972
Decrease (increase) in:
Receivables 6,442,176 (3,844,483) 3,812,608
Expendable parts, fuel, materials and supplies 1,181,144 (407,955) (1,319,474)
Other current assets 132,794 382,316 (877,883)
Other noncurrent assets 1,884,749 70,345 –
Increase (decrease) in:
Accounts payable 187,630 (938,479) (1,105,617)
Accrued expenses and other current liabilities 2,762,073 4,187,841 3,100,799
Unearned transportation revenue (6,251,231) 3,319,965 1,921,326
Net movement on derivative transactions (1,741,938) (233,171) (12,830)
Cash generated from operations 4,508,955 31,153,008 9,825,901
Financing charges paid (3,338,415) (3,645,290) (5,015,321)
Interest received 137,980 419,544 188,381
Income taxes paid (including final and creditable withholding taxes) (381,817) (748,843) (1,074,575)
Net cash flows from operating activities 926,703 27,178,419 3,924,386
CASH FLOWS FROM INVESTING ACTIVITIES

Additions to property and equipment (Notes 10 and 23) (2,510,962) (4,895,303) (6,039,884)
Investments in:
Financial assets at FVTOCI – (861) (5,416)
Money market placements (30,000) – –
Additions to security deposits (Note 12) (5,127,848) (3,667,431) (1,149,793)
Proceeds from disposal of:
Investment property (Note 11) 3,096,043 – –
Property and equipment (Note 10) 80,885 – 270,744
Assets held for sale (Note 10) 12,006 306,401 –
Refund of predelivery payments (Note 24) 1,047,806 4,951,698 12,790,348
Return of various deposits (Note 12) 3,214,804 1,187,433 565,484
Dividend received (Notes 12 and 18) 336 22,880 12,320
Net cash flows from (used in) investing activities (216,930) (2,095,183) 6,443,803
(Forward)
62 *SGVFS162312*
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2020 2019 2018
CASH FLOWS FROM FINANCING ACTIVITIES

Availments of:
Notes payable (Notes 13 and 18) P
=3,937,886 P14,644,613
= P8,357,591
=
Long-term obligations (Notes 15, 18, 23 and 24) 792,379 10,940,336 7,887,000
Advances from an affiliate (Note 18) – – 1,780,411
Proceeds from disposal of partial interest in a subsidiary (Note 9) – 4,427,005 –
Receipt of deposits from non-controlling interest
of a subsidiary (Note 16) 6,383,409 11,411,253 –
Payments of:
Notes payable (Notes 13 and 18) (9,977,258) (15,809,218) (6,690,805)
Long-term obligations (Notes 15, 18, 23 and 24) (13,964,179) (41,895,270) (21,859,084)
Advances to an affiliate (Note 18) – – (318,000)
Acquisition of non-controlling interest (Note 17) – – (3,084,553)
Net cash flows used in financing activities (12,827,763) (16,281,281) (13,927,440)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND

CASH EQUIVALENTS (628,375) (680,220) 467,875
NET INCREASE (DECREASE) IN CASH AND

CASH EQUIVALENTS (12,746,365) 8,121,735 (3,091,376)
CASH AND CASH EQUIVALENTS AT

BEGINNING OF YEAR 15,104,012 6,982,277 10,073,653
CASH AND CASH EQUIVALENTS AT

END OF YEAR (Note 5) P
=2,357,647 =15,104,012
P =6,982,277
P
63 *SGVFS162312*
`1
PAL HOLDINGS, INC.

AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Thousands, Except When Otherwise Indicated)
1. Corporate Information and Authorization for Reissuance of the Consolidated Financial

Statements
Corporate Information
PAL Holdings, Inc. (the Parent Company or PHI) was incorporated in the Philippines on May 10, 1930
to engage in the business of a holding company. On October 5, 1979, the Parent Company applied and
was granted an extension of its corporate life by the Philippine Securities and Exchange Commission
(SEC) for another 50 years from May 1980.
The Parent Company and its subsidiaries (collectively referred to herein as “the Group”), is primarily
engaged in air transport of passengers and cargo within the Philippines and between the Philippines
and several international destinations. The Group operates through its major subsidiaries; Philippine
Airlines, Inc. (PAL), the Philippine national flag carrier, and Air Philippines Corporation (APC), a
subsidiary under common control that was indirectly acquired by the Parent Company through Zuma
Holdings Management Corporation (ZUMA) in 2017. The Parent Company is 76.92% owned by
Trustmark Holdings Corporation (Trustmark) as of December 31, 2020 and 2019. As of December 31,
2020 and 2019, Trustmark is 60% owned by Buona Sorte Holdings, Inc. (BSHI) and 40% owned by
Horizon Global Investments, Ltd. (HGIL). BSHI is the ultimate parent of the Group. BSHI and
Trustmark were likewise incorporated in the Philippines and are part of the Lucio Tan Group of
Companies, while HGIL was incorporated in British Virgin Islands.
The Parent Company’s registered office address is 8th Floor, PNB Financial Center, President
Diosdado Macapagal Ave., CCP Complex, Pasay City, Metro Manila.
PAL Franchise
PAL operates under a franchise, which extends up to the year 2034, granted by the Philippine
Government under Presidential Decree No. 1590. As provided for under the franchise, PAL is subject
to:

whichever is lower, in lieu of all other taxes, duties, royalties, registration licenses and other fees, and
charges of any kind, nature, or description, imposed, levied, established, assessed, or collected by any
municipal, city, provincial or national authority or government agency, except real property tax.
APC Franchise
APC operates under a franchise for a term of 25 years from August 8, 1997, the date of effectivity of
Republic Act (RA) No. 8339, with some provisions amended under RA No. 9215 effective
May 5, 2003. As provided for under the franchise, APC is subject to, among others:

64 *SGVFS162312*
-2-
whichever is lower, in lieu of all other taxes, duties, fees, and licenses of any kind, nature, or description,
imposed, levied, established, assessed, or collected by any municipal, city, provincial or national
authority or government agency, except real property tax.
As further provided for under PAL’s and APC’s franchises, PAL and APC can carry forward as a
deduction from taxable income, net loss incurred in any year up to five years following the year of such
loss (see Note 22). In addition, the payment of the principal, interest, fees, and other charges on foreign
loans obtained by PAL and APC, and all rentals, interest, fees and other charges paid by PAL and APC
to their lessors for the lease of aircraft, engines, spares, other flight or ground equipment, and other
personal property are exempt from all taxes, including withholding tax, provided that the liability for
the payment of said taxes is assumed by the grantee (PAL or APC, as applicable). Under RA No. 9337
or the E-VAT Act of 2005 which took effect on November 1, 2005, the franchise tax of PAL and APC
was abolished and PAL and APC became subject to the corporate income tax. PAL and APC remain
exempt from any taxes, duties, royalties, registration license, and other fees and charges, as may be
provided under PAL’s and APC’s franchises.
Board of Investments (BOI) Registration

In 2018, PAL registered with the BOI as a new operator of air transport services on a non-pioneer status
under the Omnibus Investments Code of 1987 (Executive Order No. 226). Under the terms of the
registration with the BOI, PAL is entitled to certain fiscal and non-fiscal incentives available to the
registered project, including among others, an income tax holiday (ITH) for a period of four years from
the month following the delivery date or actual start of commercial operations of the aircraft, whichever
is earlier. The availment of which, however, shall in no case be earlier than the date of registration (see
Note 22).
Authorization for Reissuance of the Consolidated Financial Statements

These accompanying consolidated financial statements as at December 31, 2020 and 2019 and for each
of the three years in the period ended December 31, 2020 were previously authorized for issue by the
Parent Company’s BOD on May 26, 2021. The Parent Company subsequently reissued the consolidated
financial statements following the US Court’s confirmation of the Plan of PAL, along with other events
and current implementation of the Plan (see Notes 2 and 30). The consolidated financial statements
January 31, 2022. 2022.
were authorized for reissuance by the Parent Company’s BOD on <Month><Date>,
2. Status of Operations, Recovery Plan, Key Initiatives to Support the Recovery Plan and Material
Uncertainty Related to Going Concern
The consolidated financial statements have been prepared assuming that the Group will continue as a
going concern. The effect of the recent unfavorable economic conditions due to the COVID-19
pandemic and the reduced demand for air travel placed severe pressure on the Group’s financial
position, financial performance and cash flows.
Status of Operations
The Group reported consolidated total comprehensive loss of P =73.00 billion for the year ended
December 31, 2020 which increased the deficit to P
=88.97 billion and resulted to capital deficiency
attributable to equity holders of the Parent Company amounting to P =74.05 billion as of
December 31, 2020. In addition, the Group’s current liabilities exceeded the current assets by
=164.02 billion as of December 31, 2020. As at December 31, 2020, the Group has the following
P
outstanding long-term obligations (see Note 15):
65 *SGVFS162312*
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Secured Loans
=18.53 billion ($385.89 million) US Dollar asset-backed securities
P
=12.48 billion ($259.84 million) Japanese Yen asset-backed securities
P
=1.56 billion ($32.51 million) term loans from local banks
P
Lease Liabilities
=149.55 billion aircraft and engine leases
P
=2.48 billion ground property leases
P
The Group’s liquidity situation became more critical in 2020 and 2021 due to severely weak passenger
sales and revenue as an adverse effect of the COVID-19 pandemic. The COVID-19 outbreak and the
measures taken by the Philippine and foreign governments have caused disruptions to the Group’s
passenger operations, resulting to temporary suspension and limited operations of its flights both for
domestic and international routes. Consequently, the decline in revenue and cash inflows has put
significant strain on the Group’s liquidity position and on its compliance with certain loan covenants.
The Group has not made principal and/or interest payments due in respect of the above long-term
obligations since April 2020, resulting in breach of certain loan covenants and default provisions in the
lease and loan agreements. Hence, the balances of the long-term obligations that are deemed due and
demandable are classified as current liabilities as at December 31, 2020 (see Note 15).
Recovery Plan
The Group is addressing the conditions set out above with the immediate implementation of cost-cutting
measures, deferral of lease and loan principal payments, deferral of payment of airport authority fees
and charges, extension of credit terms with critical vendors, delay of aircraft and engine capital
expenditure, suspension of all non-aircraft capital expenditure, disposal of non-core assets, and
execution of a retrenchment program. The Group also engaged financial advisors and legal counsels
to assist in the recovery plan which includes the negotiations with its local and foreign bank creditors
as well as aircraft lessors and trade creditors to restructure its existing debts, the refinement and
validation of the Group’s fleet and network strategy and embarking on a financial restructuring to
ensure the Group’s business continuity. The COVID-19 situation, however, continues to undermine the
Group’s ability to generate sufficient revenues and cash to meet its financial obligations. In May 2020,
management presented to the BOD the Group’s recovery plan that focuses on the following four key
areas: (1) right-sized network fleet; (2) effective customer engagement; (3) cost containment; and (4)
financial restructuring (see Note 30).
Chapter 11 Plan of Reorganization of Philippine Airlines, Inc. (the “Plan”)

Due to the difficulty in sourcing additional financing, on September 3, 2021, PAL proceeded with the
filing of voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code in the United States
Bankruptcy Court for the Southern District of New York. The petition is for PAL to be authorized to
continue to operate its business and manage its operations as a debtor-in-possession pursuant to
Sections 1107 and 1108 of the Bankruptcy Code and pursue confirmation of a pre-arranged plan of
reorganization to effect the restructuring contemplated by various Restructuring Support Agreements
(“RSAs”).
On September 24, 2021, PAL filed with the Regional Trial Court, National Capital Judicial Region,
Branch CXI (111), Pasay City, the local court, the petition seeking recognition of foreign proceedings
in relation to the Chapter 11 case. On October 22, 2021, the local court granted PAL’s petition and
rendered judgment (i) recognizing the Chapter 11 proceeding; and (ii) giving force and effect to the
Chapter 11 proceeding and all court orders issued by the US Court in connection with such foreign
proceeding, among others.
66 *SGVFS162312*
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On September 30, 2021, the US Court issued an order authorizing PAL to obtain post-petition financing
consisting of an aggregate amount of $505.00 million comprising (a) a first lien secured Tranche A
multi-draw term loan facility (the “Tranche A DIP Facility) in an aggregate amount of $250.00 million
from BSHI, $20.00 million of which had been drawn on September 13, 2021 before the approval of the
order; and (b) a second lien secured Tranche B multi-draw term loan facility (the “Tranche B DIP
Facility” and, together with the Tranche A DIP Facility, the “DIP Facility”) in an aggregate principal
amount of $255.00 million from PHI, which was provided by BSHI through a separate loan agreement
with PHI The Tranche A DIP Facility and Tranche B DIP facility were fully drawn by PAL on October
6, 2021 and November 3, 2021, respectively. The proceeds from the DIP Facility were used to meet its
obligations arising during the Chapter 11 proceedings, including its administration, and as working
capital to operate its business.
On October 13, 2021, PAL filed the proposed Chapter 11 Plan of Reorganization of Philippine Airlines,
Inc. (the “Plan”). The objective of the Plan is to reduce near-term payments of obligations to allow
sufficient liquidity to stabilize the financial condition of the Group and to restore the ability of the
Group to service its financial obligations, as restructured, on an on-going basis. The Plan included the
reduction of its fleet to align its capacity with the projected recovery of demand.
As a consequence of this post-petition financing and in view of the consent of majority of all the
creditors and lessors (in monetary terms), on December 17, 2021, the US court confirmed its approval
of the Plan. Further, the US court order stated that PAL may take any action free of any restrictions of
the US Bankruptcy Code or Bankruptcy Rules and in all respects as if there were no pending cases
under any chapter or provision of the Bankruptcy Code, except as expressly provided in the Plan.
On December 31, 2021, PAL filed with the US court a Notice of Effective Date and Entry Order (i)
Confirming the Debtor’s Chapter 11 Plan of Reorganization and (ii) Granting Related Relief before the
US Court. The notice states that all conditions precedent to the Effective Date set forth in Section 9.2,
Conditions Precedent to Effective Date, of the Plan have been satisfied or waived pursuant to Section
9.3, Waiver of Condition Precedent, of the Plan, such that the Plan was substantially consummated, and
the Effective Date occurred, on December 31, 2021.
With the approval and effectivity of the Plan, the US Court retains non-exclusive jurisdiction over all
matters related to the Chapter 11 Case or the Plan.
Key Initiatives and Conditions to Support the Recovery Plan

Management recognizes that the Group’s future viability will depend largely on improving the Group’s
operating performance, financial condition, and cash flows. Taking into consideration the following
factors and assumptions, the recent positive outcomes relating to the matters stated above and those
that the Group has and will undertake moving forward, the BOD and management believe that these
shall enable the Group to continue operations for at least, but is not limited to, the next 12 months from
the date of the consolidated financial statements, and that the basis of preparation of the consolidated
financial statements remains appropriate:
Payments of PAL’s obligations based on restructured debts, based on the negotiations with the
lessors and creditors and approval of the Plan;
Reinforcing PAL’s market position as the Philippines’ sole full-service airline with the largest
international network;
Restoring more routes and increasing flight frequencies as travel restrictions ease and borders
reopen;
Building on code sharing and interline partnerships to complement the airline’s current and future
network and allow PAL’s passengers to enjoy better connections and access to more destinations
through partner airlines;
67 *SGVFS162312*
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Expanding PAL’s cargo business to tap more air cargo market opportunities, including the
operation of all-cargo flights to keep supply chains moving and to meet specific freight transport
needs such as the airlift of vaccines and medical equipment;
Offering great value fares and competitive promotional offers;
Developing innovations to PAL’s Mabuhay Miles frequent flyer program, including an expansion
of membership rolls and enhancements to program terms and benefits
Accelerating digital transformation initiatives to deliver seamless and intuitive experiences to PAL
customers, including a more personalized website and mobile app, a streamlined booking process
that offers more flexible payment options such as e-wallets and installment plans, enhanced self-
service options for rebooking and check-in, and improved chat facilities and inter-active voice
response (IVR) functions through PAL’s contact center;
Rolling out PAL’s new product advancements within 2022, as part of a commitment to
continuously upgrade services and the overall customer travel experience;
Upholding, as always, the strictest professional safety standards and health protocols in all of PAL’s
operations; and
Generating positive projected monthly operating cash flows in 2022 as a result of the gradual
recovery in the travel industry and the effect of the cost containment measures implemented in
2020 and early 2021.
Material Uncertaint Related to Going Concern

The scale and duration of the impact of COVID-19 outbreak as well as the impact it will have on the
Group’s earnings, cash flows and financial condition remain uncertain. Further, there can be no
assurance, despite the Group’s implementation of the Plan, that the Group will achieve profitability or
positive cash flows. These conditions give rise to material uncertainties that may cast significant doubt
on the Group’s ability to continue as a going concern, and therefore, the Group may not be able to
realize its assets and discharge its liabilities in the normal course of business. The consolidated financial
statements as of and for the year ended December 31, 2020, do not include any adjustments that have
to be made to reflect the situation relating to the recoverability of asset carrying amounts or the amounts
of liabilities that might result should the Group be unable to continue as a going concern.
3. Summary of Significant Accounting and Financial Reporting Policies
Basis of Preparation
The consolidated financial statements have been prepared using the historical cost convention, except
for buildings and improvements under property and equipment which are carried at revalued amounts,
and financial assets at fair value through other comprehensive income (FVTOCI), and derivative
financial instruments which are carried at fair value through profit or loss (FVTPL). The consolidated
financial statements are presented in Philippine Peso, the Parent Company’s functional and presentation
currency. All amounts are rounded to the nearest thousands, except when otherwise indicated.
Statement of Compliance
The consolidated financial statements have been prepared in accordance with Philippine Financial
Reporting Standards (PFRSs).
Changes in Accounting Policies

The accounting policies adopted are consistent with those of the previous financial year, except that the
Group has adopted the following new accounting pronouncements starting January 1, 2020. The new
accounting pronouncements do not have significant impact to the consolidated financial statements,
unless otherwise indicated:
68 *SGVFS162312*
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Effective starting January 1, 2020
Amendments to PFRS 3, Business Combinations, Definition of a Business
The amendments to PFRS 3 clarifies that to be considered a business, an integrated set of activities
and assets must include, at a minimum, an input and a substantive process that together significantly
contribute to the ability to create output. Furthermore, it clarifies that a business can exist without
including all of the inputs and processes needed to create outputs. These amendments may impact
future periods should the Group enter into any business combinations.
Amendments to PFRS 7, Financial Instruments: Disclosures and PFRS 9, Financial Instruments,

Interest Rate Benchmark Reform
The amendments to PFRS 9 provide a number of reliefs, which apply to all hedging relationships
that are directly affected by the interest rate benchmark reform. A hedging relationship is affected
if the reform gives rise to uncertainties about the timing and or amount of benchmark-based cash
flows of the hedged item or the hedging instrument.
Amendments to PAS 1, Presentation of Financial Statements, and PAS 8, Accounting Policies,

Changes in Accounting Estimates and Errors, Definition of Material
The amendments provide a new definition of material that states “information is material if
omitting, misstating or obscuring it could reasonably be expected to influence decisions that the
primary users of general purpose financial statements make on the basis of those financial
statements, which provide financial information about a specific reporting entity.”
The amendments clarify that materiality will depend on the nature or magnitude of information,
either individually or in combination with other information, in the context of the financial
statements. A misstatement of information is material if it could reasonably be expected to
influence decisions made by the primary users.
Conceptual Framework for Financial Reporting issued on March 29, 2018
The Conceptual Framework is not a standard, and none of the concepts contained therein override
the concepts or requirements in any standard. The purpose of the Conceptual Framework is to
assist the standard-setters in developing standards, to help preparers develop consistent accounting
policies where there is no applicable standard in place and to assist all parties to understand and
interpret the standards.
The revised Conceptual Framework includes new concepts, provides updated definitions and
recognition criteria for assets and liabilities and clarifies some important concepts.
Amendments to PFRS 16, Leases, COVID-19-related Rent Concessions
The amendments provide relief to lessees from applying the PFRS 16 requirement on lease
modifications to rent concessions arising as a direct consequence of the COVID-19 pandemic. A
lessee may elect not to assess whether a rent concession from a lessor is a lease modification if it
meets all of the following criteria:
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The rent concession is a direct consequence of COVID-19;

The change in lease payments results in a revised lease consideration that is substantially the
same as, or less than, the lease consideration immediately preceding the change;
Any reduction in lease payments affects only payments originally due on or before
June 30, 2021; and
There is no substantive change to other terms and conditions of the lease.
A lessee that applies this practical expedient will account for any change in lease payments resulting
from the COVID-19 related rent concession in the same way it would account for a change that is
not a lease modification, i.e., as a variable lease payment.
The amendments are effective for annual reporting periods beginning on or after June 1, 2020.
Early adoption is permitted.
The Group adopted the amendments beginning January 1, 2020. The adoption did not have
significant impact to the consolidated financial statements.
New Accounting Standards and Amendments to Existing

Standards Effective Subsequent to December 31, 2020
Pronouncements issued but not yet effective are listed below. Unless otherwise indicated, the Group
does not expect that the future adoption of the said pronouncements will have a significant impact on
the consolidated financial statements. The Group intends to adopt the following pronouncements when
they become effective.
Effective starting on or before January 1, 2021

Amendments to PFRS 9, PFRS 7, PFRS 4, Insurance Contracts and PFRS 16, Interest Rate
Benchmark Reform - Phase 2
The amendments provide the following temporary reliefs which address the financial reporting
effects when an interbank offered rate (IBOR) is replaced with an alternative nearly risk-free
interest rate (RFR):
Practical expedient for changes in the basis for determining the contractual cash flows as a
result of IBOR reform;
Relief from discontinuing hedging relationships; and
Relief from the separately identifiable requirement when an RFR instrument is designated as a
hedge of a risk component.
The Group shall also disclose information about:

The about the nature and extent of risks to which the entity is exposed arising from financial
instruments subject to IBOR reform, and how the entity manages those risks; and
Their progress in completing the transition to alternative benchmark rates, and how the entity
is managing that transition.
The amendments are effective for annual reporting periods beginning on or after January 1, 2021
and apply retrospectively, however, the Group is not required to restate prior periods.
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Effective beginning on or after January 1, 2022

Amendments to PFRS 3, Reference to the Conceptual Framework
The amendments are intended to replace a reference to the Framework for the Preparation and
Presentation of Financial Statements, issued in 1989, with a reference to the Conceptual Framework
for Financial Reporting issued in March 2018 without significantly changing its requirements. The
amendments added an exception to the recognition principle of PFRS 3, Business Combinations to
avoid the issue of potential ‘day 2’gains or losses arising for liabilities and contingent liabilities
that would be within the scope of PAS 37, Provisions, Contingent Liabilities and Contingent Assets
or Philippine-IFRIC 21, Levies, if incurred separately.
At the same time, the amendments add a new paragraph to PFRS 3 to clarify that contingent assets
do not qualify for recognition at the acquisition date.
and apply prospectively.
Amendments to PAS 16, Property, Plant and Equipment: Proceeds before Intended Use
The amendments prohibit entities deducting from the cost of an item of property, plant and
equipment, any proceeds from selling items produced while bringing that asset to the location and
condition necessary for it to be capable of operating in the manner intended by management.
Instead, an entity recognizes the proceeds from selling such items, and the costs of producing those
items, in profit or loss.
The amendment is effective for annual reporting periods beginning on or after January 1, 2022 and
must be applied retrospectively to items of property, plant and equipment made available for use
on or after the beginning of the earliest period presented when the entity first applies the
amendment.
The amendments are not expected to have a material impact on the consolidated financial
statements.
Amendments to PAS 37, Onerous Contracts - Costs of Fulfilling a Contract
The amendments specify which costs an entity needs to include when assessing whether a contract
is onerous or loss-making. The amendments apply a “directly related cost approach”. The costs that
relate directly to a contract to provide goods or services include both incremental costs and an
allocation of costs directly related to contract activities. General and administrative costs do not
relate directly to a contract and are excluded unless they are explicitly chargeable to the
counterparty under the contract.
The amendments are effective for annual reporting periods beginning on or after January 1, 2022.
The Group will apply these amendments to contracts for which it has not yet fulfilled all its
obligations at the beginning of the annual reporting period in which it first applies the amendments.
Annual Improvements to PFRSs 2018-2020 Cycle
Amendments to PFRS 1, First-time Adoption of Philippines Financial Reporting Standards,

Subsidiary as a first-time adopter
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The amendment permits a subsidiary that elects to apply paragraph D16(a) of PFRS 1 to
measure cumulative translation differences using the amounts reported by the parent, based on
the parent’s date of transition to PFRS. This amendment is also applied to an associate or joint
venture that elects to apply paragraph D16(a) of PFRS 1.
The amendment is effective for annual reporting periods beginning on or after January 1, 2022
with earlier adoption permitted. The amendments are not expected to have a material impact
on the consolidated financial statements.
Amendments to PFRS 9, Financial Instruments, Fees in the ’10 per cent’ test for derecognition
of financial liabilities
The amendment clarifies the fees that an entity includes when assessing whether the terms of
a new or modified financial liability are substantially different from the terms of the original
financial liability. These fees include only those paid or received between the borrower and the
lender, including fees paid or received by either the borrower or lender on the other’s behalf.
An entity applies the amendment to financial liabilities that are modified or exchanged on or
after the beginning of the annual reporting period in which the entity first applies the
amendment.
The amendment is effective for annual reporting periods beginning on or after January 1, 2022
with earlier adoption permitted. The Group will apply the amendments to financial liabilities
that are modified or exchanged on or after the beginning of the annual reporting period in which
the entity first applies the amendment. The amendments are not expected to have a material
impact on the consolidated financial statements.
Amendments to PAS 41, Agriculture, Taxation in fair value measurements
The amendment removes the requirement in paragraph 22 of PAS 41 that entities exclude cash
flows for taxation when measuring the fair value of assets within the scope of PAS 41.
An entity applies the amendment prospectively to fair value measurements on or after the
beginning of the first annual reporting period beginning on or after January 1, 2022 with earlier
adoption permitted. The amendments are not expected to have a material impact on the
consolidated financial statements.
Effective beginning on or after January 1, 2023

Amendments to PAS 1, Classification of Liabilities as Current or Non-current
The amendments clarify paragraphs 69 to 76 of PAS 1, Presentation of Financial Statements, to
specify the requirements for classifying liabilities as current or non-current. The amendments
clarify:
What is meant by a right to defer settlement;
That a right to defer must exist at the end of the reporting period;
That classification is unaffected by the likelihood that an entity will exercise its deferral right;
and
That only if an embedded derivative in a convertible liability is itself an equity instrument
would the terms of a liability not impact its classification.
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and must be applied retrospectively. The Group is currently assessing the impact the amendments
will have on current practice and whether existing loan agreements may require renegotiation.
PFRS 17, Insurance Contracts
PFRS 17 is a comprehensive new accounting standard for insurance contracts covering recognition
and measurement, presentation and disclosure. Once effective, PFRS 17 will replace PFRS 4,
Insurance Contracts. This new standard on insurance contracts applies to all types of insurance
contracts (i.e., life, non-life, direct insurance and re-insurance), regardless of the type of entities
that issue them, as well as to certain guarantees and financial instruments with discretionary
participation features. A few scope exceptions will apply.
The overall objective of PFRS 17 is to provide an accounting model for insurance contracts that is
more useful and consistent for insurers. In contrast to the requirements in PFRS 4, which are largely
based on grandfathering previous local accounting policies, PFRS 17 provides a comprehensive
model for insurance contracts, covering all relevant accounting aspects. The core of PFRS 17 is the
general model, supplemented by:
A specific adaptation for contracts with direct participation features (the variable fee approach);
and
A simplified approach (the premium allocation approach) mainly for short-duration contracts.
PFRS 17 is effective for reporting periods beginning on or after January 1, 2023, with comparative
figures required. Early application is permitted.
Deferred effectivity
Amendments to PFRS 10, Consolidated Financial Statements, and PAS 28, Investment in
Associates and Joint Venture, Sale or Contribution of Assets between an Investor and its Associate
or Joint Venture
The amendments address the conflict between PFRS 10 and PAS 28 in dealing with the loss of
control of a subsidiary that is sold or contributed to an associate or joint venture. The amendments
clarify that a full gain or loss is recognized when a transfer to an associate or joint venture involves
a business as defined in PFRS 3. Any gain or loss resulting from the sale or contribution of assets
that does not constitute a business, however, is recognized only to the extent of unrelated investors’
interests in the associate or joint venture.
On January 13, 2016, the Financial Reporting Standards Council deferred the original effective
date of January 1, 2016 of the said amendments until the International Accounting Standards Board
(IASB) completes its broader review of the research project on equity accounting that may result
in the simplification of accounting for such transactions and of other aspects of accounting for
associates and joint ventures.
Basis of Consolidation
The consolidated financial statements comprise the financial statements of the Parent Company and its
subsidiaries as at December 31, 2020 and 2019 and for each of the three years in the period ended
December 31, 2020. The financial statements of the subsidiaries are prepared using consistent
accounting policies as those of the Parent Company.
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The subsidiaries and the respective percentages of ownership of the Parent Company as at
December 31, 2020 and 2019 are as follows:
Direct Indirect
PAL 98.57% 0.35%
Sabre Travel Network (Philippines), Inc. (Sabre) – 82.10%
PAL Receivables Co. Ltd. (PRC) – –
Mabuhay Miles Inc. (MMI) – 98.92%
Mabuhay Maritime Express Transport Inc. (MMET) – 98.92%
Fortunate Star Limited (FSL) – 64.30%
PR Holdings, Inc. (PRI) 82.33% –
ZUMA 51.00% –
APC 50.98%
GuidetothePhilippines Inc. (Guide) 28.04%
The subsidiaries’ operation and principal activity are as follows: PAL and APC are primarily engaged
in air transport of passengers and cargo within the Philippines and between the Philippines and several
international destinations; Sabre engages in development and marketing of computerized airline
reservation system; PRC is a structured entity over which PAL has control; FSL is a holding company
of various entities with whom PAL has lease agreements; MMI is intended to promote the frequent
flyer program of PAL; PRI and ZUMA are holding companies; MMET is a company established in
2016 which will engage in water transportation of passengers and cargoes. Guide is a newly established
entity intended to develop and operate an inbound business-to-consumer (B2C) online travel
marketplace. PAL, Sabre, MMI, MMET, PRI, ZUMA, APC and Guide are domiciled in the Philippines
while PRC and FSL are incorporated in Cayman Islands. MMI commenced its operations in 2018 and
ceased its operations in 2019. MMET has started and ceased commercial operations in 2019.
The Parent Company or its subsidiaries control an investee if and only if the following criteria are met:
Power over the investee (i.e., existing rights that give it the current ability to direct the relevant
activities of the investee)
Exposure, or rights, to variable returns from its involvement with the investee
The ability to use its power over the investee to affect its returns
When the Parent Company or its subsidiaries have less than a majority of the voting or similar rights
of an investee, the Parent Company or its subsidiaries consider all relevant facts and circumstances in
assessing whether they have power over an investee, including:
The contractual arrangement with the other vote holders of the investee
Rights arising from other contractual arrangements
The Parent Company or its subsidiaries’ voting rights and potential voting rights
The Parent Company or its subsidiaries reassess whether or not they control an investee if facts and
circumstances indicate that there are changes to one or more of the three elements of control.
Consolidation of a subsidiary begins when the Parent Company or its subsidiaries obtain control over
the subsidiary and ceases when it ceases to have control of the subsidiary. Assets, liabilities, income
and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated
statement of comprehensive income from the date the Group gains control until the date control is lost.
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Profit or loss and each component of other comprehensive income are attributed to the equity holders
of the Parent Company and to the non-controlling interests, even if this results in the non-controlling
interests having a deficit balance.
The financial statements of the subsidiaries are prepared for the same reporting period as the Parent
Company. All intra-group balances, transactions, unrealized gains and losses, resulting from intra-
group transactions and dividends are eliminated in full.
A change in the ownership interest in a subsidiary, without a loss of control, is accounted for as an
equity transaction. When the Parent Company loses control of a subsidiary, it:
Derecognizes the assets (including goodwill) and liabilities of the subsidiary

Derecognizes the carrying amount of any noncontrolling interests
Derecognizes the cumulative translation differences recorded in equity
Recognizes the fair value of the consideration received
Recognizes the fair value of any investment retained
Recognizes any surplus or deficit in profit or loss
Reclassifies the Parent Company’s share of components previously recognized in other
comprehensive income (OCI) to profit or loss or retained earnings, as appropriate, as would be
required if the Parent Company had directly disposed of the related assets or liabilities.
Non-controlling interest represents the interest in the subsidiaries not held by the Parent Company and
are presented separately in the consolidated statement of comprehensive income and consolidated
statement of changes in equity and within equity in the consolidated statement of financial position,
separate from the equity attributable to the equity holders of the Parent Company.
Business Combination under Common Control

Where there are business combinations in which all the combining entities within the Group are
ultimately controlled by the same ultimate parent (i.e., Controlling Shareholders) before and after the
business combination and that the control is not transitory (“business combinations under common
control”), the Group accounts such business combinations similar to a pooling of interests. The assets
and liabilities of the acquired entities and that of the Group are reflected at their carrying values. The
difference in the amount recognized and the fair value of the consideration given, is accounted for as
an equity transaction, i.e., as either a contribution or distribution of equity. Further, when a subsidiary
is disposed in a common control transaction, the difference in the amount recognized and the fair value
of the consideration received, is also accounted for as an equity transaction. The Group recorded the
difference as other equity reserves and presented as separate component of equity in the consolidated
statements of financial position. Comparatives shall be restated to include balances and transactions as
if the entities had been acquired at the beginning of the earliest period presented as if the companies
had always been combined.
Cash and Cash Equivalents

Cash includes cash on hand and in banks. Cash equivalents are short-term, highly liquid investments
that are readily convertible to known amounts of cash with original maturities of three months or less
from dates of acquisition and that are subject to an insignificant risk of changes in value. Cash and cash
equivalents exclude any restricted cash (presented under “Other current assets” and “Other noncurrent
assets”) that is not available for use by the Group and therefore is not considered highly liquid, such as
cash set aside to collateralize various surety bonds.
For the purpose of the consolidated statement of cash flows, cash and cash equivalents consist only of
cash and cash equivalents as defined above.
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Fair Value Measurement

The Group measures financial instruments, such as financial assets at FVTOCI and derivatives, and
nonfinancial assets such as buildings and improvements carried at revalued amounts, at fair value at
the end of reporting period.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. The fair value measurement is based
on the presumption that the transaction to sell the asset or transfer the liability takes place either:
in the principal market for the asset or liability, or

in the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible to the Group.
The fair value of an asset or a liability is measured using the assumptions that market participants would
use when pricing the asset or liability, assuming that market participants act in their economic best
interest.
A fair value measurement of a nonfinancial asset takes into account a market participant’s ability to
generate economic benefits by using the asset in its highest and best use or by selling it to another
market participant that would use the asset in its highest and best use.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient
data are available to measure fair value, maximizing the use of relevant observable inputs and
minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the consolidated financial
statements are categorized within the fair value hierarchy, described as follows, based on the lowest
level of input that is significant to the fair value measurement as a whole:
Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 - Valuation techniques for which the lowest level of input that is significant to the fair value
measurement is directly or indirectly observable
Level 3 - Valuation techniques for which the lowest level of input that is significant to the fair value
measurement is unobservable.
For assets and liabilities that are recognized in the consolidated financial statements on a recurring
basis, the Group determines whether transfers have occurred between Levels in the hierarchy by re-
assessing categorization (based on the lowest level of input that is significant to the fair value
measurement as a whole) at the end of each reporting period.
For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on
the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value
hierarchy.
Financial Instruments
Date of recognition
The Group recognizes a financial asset or a financial liability in the consolidated statement of financial
position when it becomes a party to the contractual provisions of the instrument. Purchases or sales of
financial assets, recognition and de-recognition, as applicable, that require delivery of assets within the
time frame established by regulation or convention in the market place are recognized on the settlement
date.
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Initial recognition of financial instruments

Financial instruments are recognized initially at fair value, which is the fair value of the consideration
given (in case of an asset) or received (in case of a liability). With the exception of trade receivables
or for which the Group has applied the practical expedient, the Group’s initial measurement of financial
instruments, except for those classified as FVTPL, includes transaction cost. Trade receivables or for
which the Group has applied the practical expedient are measured at the transaction price determined
under PFRS 15.
Financial assets
At initial recognition, the Group classifies its financial assets as follows:
FVTPL
FVTOCI
Financial assets measured at amortized cost
The basis of the classification of the Group’s financial instruments depends on the following:
The Group’s business model for managing its financial assets; and
The contractual cash flow characteristics of the financial assets.
A financial asset is classified to be measured at amortized cost if following conditions were met:
The financial asset is held to collect the contractual cash flows; and
Contractual terms of the financial asset give rise to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
Financial assets are classified as FVTOCI if the following conditions were met:
The financial asset is held within a business model whose objective is achieved by both collecting
the contractual cash flows and selling the financial asset; and
Contractual terms of the financial asset give rise to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
Financial assets shall be classified as FVTPL unless it is measured at amortized cost or at FVTOCI.
The Group may also irrevocably elect at the initial recognition of equity instruments that would
otherwise be measured at FVTPL to be presented as FVTOCI.
Financial liabilities
Financial liabilities are classified as measured at amortized cost except for:
Financial liabilities measured at FVTPL which include derivatives that liabilities measured at fair
value;
Financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition
or when the continuing involvement approach applies;
Financial guarantee contracts;
Commitments to provide a loan at a below-market interest rate; and
Contingent considerations recognized by an acquirer in a business combination to which
PFRS 3 applies.
Subsequent measurement
Financial assets measured at amortized cost
After initial measurement, these financial assets are subsequently measured at amortized cost using the
effective interest method, less allowance for impairment. Amortized cost is calculated by considering
any discount or premium on acquisition and fees that are an integral part of the effective interest rate.
Gains and losses are recognized in profit or loss when the loans and receivables are derecognized and
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impaired, as well as through the amortization process. Loans and receivables are included under current
assets if realizability or collectability is within twelve months after the reporting period. Otherwise,
these are classified as noncurrent assets.
The Group’s cash in banks and cash equivalents, receivables, security deposits, miscellaneous deposits
and deposits on aircraft leases are classified under this category.
FVTOCI (equity instruments)
Gains and losses on these financial assets are never recycled to profit or loss. Dividends are recognized
as other income in profit or loss when the right of payment has been established, except when the Group
benefits from such proceeds as a recovery of part of the cost of the financial asset, in which case, such
gains are recorded in OCI. Equity instruments designated at fair value through OCI are not subject to
impairment assessment.
The Group elected to classify irrevocably its equity investments under this category.
Financial liabilities measured at amortized cost

After initial recognition, these financial liabilities are carried at amortized cost, taking into account the
impact of applying the effective interest method of amortization (or accretion) for any related premium,
discount and any direct attributable transaction cost. Gains or loss on financial liabilities are recognized
in profit or loss when the liabilities are derecognized, as well as through the amortization process.
The Group’s notes payable, accounts payable and accrued expenses, lease liabilities, long-term debt
and deposits on subleased aircraft (included under “Reserves and other noncurrent liabilities” in the
consolidated statement of financial position) are classified under this category.
“Day 1” difference
Where the transaction price in a non-active market is different from the fair value from other observable
current market transactions in the same instrument or based on a valuation technique whose variables
include only data from observable market, the Group recognizes the difference between the transaction
price and the fair value (a “Day 1” difference) in profit or loss unless it qualifies for recognition as
some other type of asset. In cases where data used is not observable, the difference between the
transaction price and model value is only recognized in profit or loss when the inputs become
observable or when the instrument is derecognized. For each transaction, the Group determines the
appropriate method of recognizing the “Day 1” difference amount.
Derivatives and hedge accounting

Freestanding derivatives
For the purpose of hedge accounting, hedges are classified primarily either as: (a) a hedge of the fair
value of a recognized asset or liability or an unrecognized firm commitment (fair value hedge);
(b) a hedge of the exposure to variability in cash flows attributable to an asset or liability or a forecasted
transaction (cash flow hedge); or (c) hedge of a net investment in a foreign operation. The Group did
not designate its derivative transactions as cash flow or fair value hedge for the years ended
December 31, 2020 and 2019.
At the inception of a hedge relationship, the Group formally designates and documents the hedge
relationship to which the Group wishes to apply hedge accounting and the risk management objective
and strategy for undertaking the hedge. The documentation includes identification of the hedging
instrument, the hedged item or transaction, the nature of the risk being hedged and how the entity will
assess the hedging instrument’s effectiveness in offsetting the exposure to changes in the hedged item’s
fair value or cash flows attributable to the hedged risk. Such hedges are assessed on an ongoing basis
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to determine that they actually have been highly effective throughout the financial reporting periods for
which they were designated.
In cash flow hedges, changes in the fair value of a hedging instrument that qualifies as a highly effective
cash flow hedge are included in OCI, net of related deferred income tax. The ineffective portion is
immediately recognized in profit or loss.
If the hedged cash flow results in the recognition of an asset or a liability, gains and losses initially
recognized in equity are transferred from equity to profit or loss in the same period or periods during
which the hedged forecasted transaction or recognized asset or liability affect profit or loss.
When the hedge ceases to be highly effective, hedge accounting is discontinued prospectively. In this
case, the cumulative gain or loss on the hedging instrument that has been reported directly in equity is
recognized in profit or loss.
For derivatives that are not designated as effective accounting hedges, any gains or losses arising from
changes in fair value of derivatives are recognized directly in profit or loss.
Embedded derivatives
Embedded derivatives are separated from the hybrid contracts and accounted for at fair value through
profit or loss when the entire hybrid contracts (composed of the host contract and the embedded
derivative) are not accounted for at fair value through profit or loss, the economic risks of the embedded
derivatives are not closely related to those of their respective host contracts, and a separate instrument
with the same terms as the embedded derivative would meet the definition of a derivative.
Changes in fair values are included in profit or loss. Derivatives are carried as assets when the fair
value is positive and as liabilities when the fair value is negative.
The Group assesses whether an embedded derivative is required to be separated from the host contract
and accounted for as a derivative when the entity first becomes a party to the contract. Subsequent
reassessment is prohibited unless there is a change in the terms of the contract that significantly
modifies the cash flows that otherwise would be required under the contract, in which case reassessment
is required. The Group determines whether a modification to cash flows is significant by considering
the extent to which the expected future cash flows associated with the embedded derivative, the host
contract or both have changed and whether the change is significant relative to the previously expected
cash flows on the contract.
Derecognition of Financial Assets and Financial Liabilities

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial
assets) is derecognized when:
the rights to receive cash flows from the asset have expired
the Group has transferred its rights to receive cash flows from the asset or has assumed an obligation
to pay them in full without material delay to a third party under a “pass-through” arrangement
the Group has transferred its rights to receive cash flows from the asset and either (a) has transferred
substantially all the risks and rewards of ownership of the asset, or (b) has neither transferred nor
retained substantially all the risks and rewards of ownership of the asset, but has transferred control
of the asset.
When the Group has transferred its rights to receive cash flows from an asset and has neither transferred
nor retained substantially all the risks and rewards of ownership of the asset nor transferred control of
the asset, the asset is recognized to the extent of the Group’s continuing involvement in the asset.
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If a transfer of financial asset does not result in derecognition since the Group has retained substantially
all the risks and rewards of the ownership of the transferred asset, the Group continues to recognize the
transferred asset in its entirety and recognizes a liability for the consideration received.
A financial liability is derecognized when the obligation under the liability is discharged, cancelled or
has expired.
When an existing financial liability is replaced by another from the same lender on substantially
different terms, or the terms of an existing liability are substantially modified, such modification is
treated as the derecognition of the carrying value of the original liability and the recognition of a new
liability at fair value, and any resulting difference is recognized in profit or loss.
Impairment of Financial Assets

The Group recognizes an allowance for expected credit losses (ECLs) for all debt instruments not held
at FVTPL. ECLs are based on the difference between the contractual cash flows due in accordance
with the contract and all the cash flows that the Group expects to receive, discounted at an
approximation of the original effective interest rate. The expected cash flows will include cash flows
from the sale of collateral held or other credit enhancements that are integral to the contractual terms.
ECLs are recognized in two stages. For credit exposures for which there has not been a significant
increase in credit risk since initial recognition, ECLs are provided for credit losses that result from
default events that are possible within the next 12 months (a 12-month ECL). For those credit exposures
for which there has been a significant increase in credit risk since initial recognition, a loss allowance
is required for credit losses expected over the remaining life of the exposure, irrespective of the timing
of the default (a lifetime ECL).
For general trade receivables, the Group applies a simplified approach in calculating ECLs. Therefore,
the Group does not track changes in credit risk, but instead recognizes a loss allowance based on
lifetime ECLs at each reporting date. The Group has established a provision matrix that is based on its
historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the
economic environment.
Offsetting of Financial Instruments

Financial assets and financial liabilities are offset and the net amount is reported in the consolidated
statement of financial position if there is a currently enforceable legal right to set off the recognized
amounts and there is intention to settle on a net basis, or to realize the asset and settle the liability
simultaneously. The Group assesses that it has a currently enforceable right of offset if the right is not
contingent on a future event, and is legally enforceable in the normal course of business, event of
default, and event of insolvency or bankruptcy of the Group and all of the counterparties.
Expendable Parts, Fuel, Materials and Supplies

Expendable parts, fuel, materials and supplies are stated at the lower of cost and net realizable value.
Cost, which includes the purchase price and other costs incurred in bringing these expendable parts,
fuel, materials and supplies to their present location or condition, is determined using the moving
weighted average method. Net realizable value represents the replacement cost of these expendable
parts, fuel, materials and supplies, considering factors such as age and physical condition of these
assets.
Deposits and Prepayments

Deposits and prepayments include advance payments of various materials, various rentals and other
services that are yet to be delivered and from which future economic benefits are expected to flow to
the Group within the normal operating cycle or within 12 months from the reporting date. They are
80 *SGVFS162312*
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initially measured at the amount paid in advance by the Group for the purchase of goods and services
and are subsequently decreased by the amount of expense incurred. Prepayments are included in “Other
current assets” account in the consolidated statement of financial position.
Assets Held for Sale

Noncurrent assets are classified as held for sale if their carrying amount will be recovered principally
through a sale transaction rather than through continuing use. The asset must be available for immediate
sale in its present condition subject only to terms that are usual and customary for sales of such asset
and its sale must be highly probable. For the sale to be highly probable, (a) an appropriate level of
management must be committed to a plan to sell the asset, (b) an active program must have been
initiated, (c) the asset must be actively marketed for sale at a price that is reasonable in relation to its
current fair value, (d) the sale should be expected to qualify for recognition as a completed sale within
one year from the date of classification and (e) actions required to complete the plan should indicate
that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.
Noncurrent assets classified as held for sale are measured at the lower of their previous carrying
amount, net of any impairment, and fair value less costs to sell.
Impairment loss is recognized for any subsequent write-down of the asset to fair value less costs to sell.
Gain for any subsequent increase in fair value less costs to sell of an asset is also recognized, but not in
excess of the cumulative impairment loss that has been previously recognized.
If the Group has classified an asset as held for sale but the criteria as set out above are no longer met,
the Group ceases to classify the asset as held for sale. The Group measures a noncurrent asset that
ceases to be classified as held for sale at the lower of (a) its carrying amount before the asset was
classified as held for sale, adjusted for any depreciation, amortization or revaluations that would have
been recognized had the asset not been classified as held for sale, and (b) its recoverable amount at the
date of the subsequent decision not to sell.
Property and Equipment

Property and equipment (except buildings and improvements) are stated at cost less accumulated
depreciation and any impairment in value. Buildings and improvements are stated at revalued amounts
less accumulated depreciation and any impairment in value. Revalued amounts were determined based
on valuations performed by various qualified, independent and Philippine SEC-accredited appraisers.
Revaluations are made with sufficient regularity.
For subsequent revaluations, the accumulated depreciation at the date of the revaluation is eliminated
against the gross carrying amount of the asset. The amount of adjustment to accumulated depreciation
forms part of the increase or decrease in the carrying amount. Any resulting increase in the asset’s
carrying amount as a result of the revaluation is recognized as OCI credited directly to equity as
“Revaluation increment - net of deferred income tax effect”. Any resulting decrease is directly charged
against the related revaluation increment previously recognized in respect of the same asset and any
excess is charged against profit or loss.
The portion of revaluation increment is transferred to deficit when these are realized through
depreciation or upon the disposal or retirement of buildings and improvements.
The initial cost of property and equipment comprises its purchase price, any related capitalizable
borrowing costs attributed to predelivery payments incurred on account of aircraft acquisition and other
qualifying assets under construction, and other directly attributable costs of bringing the asset to its
working condition and location for its intended use. Manufacturers’ credits received from aircraft and
engine manufacturers which were directly applied against the purchase price of the aircraft are recorded
upon delivery of the related aircraft and engines as a reduction from the cost of the property and
81 *SGVFS162312*
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equipment (including those under finance lease). Manufacturer’s credits that are not applied to aircraft
and engines purchased, and whose risks and rewards are retained with the Group, are recognized as
income as it is earned.
Expenditures incurred after the property and equipment have been put into operation, such as repairs
and maintenance costs, are normally charged to profit or loss in the period in which the costs are
incurred. In situations where it can be clearly demonstrated that the expenditures have resulted in an
increase in the future economic benefits expected to be obtained from the use of an item of property
and equipment beyond its originally assessed standard of performance, the expenditures are capitalized
as additional cost of property and equipment.
Expenditures for scheduled and mandatory heavy maintenance on aircraft’s airframe and landing gear
are capitalized at cost and depreciated over the estimated number of years until the next major overhaul.
Generally, heavy maintenance visits are required every six to eight years for airframe and ten years for
landing gear.
Depreciation, which commences when the asset is available for its intended use, is computed on a
straight-line basis over the following estimated useful lives of the assets:
Number of Years
Passenger aircraft 4 to 20
Engines 4 to 20
Vessels 20
Buildings and improvements 5 to 40
Rotable and reparable parts 3 to 18
Ground property and equipment 3 to 8
Leasehold improvements (whichever is shorter 4 to 12
between the lease term or life of the
improvements)
Depreciation ceases at the earlier of the date that the item is classified as held for sale (or included in a
disposal group that is classified as held for sale) in accordance with PFRS 5, Non-current Assets Held
for Sale and Discontinued Operations, and the date the asset is derecognized.
Leasehold improvements are amortized over the term of the lease or life of the improvements,
whichever is shorter. Assets under lease arrangements are depreciated over the term of the lease or the
useful life of the asset, whichever is shorter, unless there is purchase option reasonably certain to be
exercised by the Group. In which case, the asset is depreciated over its useful life.
The estimated useful lives, depreciation and amortization method and residual values are reviewed
periodically to ensure that the periods, method of depreciation and amortization and residual values are
consistent with the expected pattern of economic benefits from items of property and equipment. Any
changes in the estimates arising from the review are accounted for prospectively.
When items of property and equipment are sold or retired, their costs, accumulated depreciation and
amortization, any impairment in value and related revaluation increment are eliminated from the
accounts. Any gain or loss resulting from their disposal is recognized in profit or loss.
“Construction in progress” represents aircraft, vessels, buildings and improvements and other ground
property under construction, while “Predelivery payments” represent advance payments for aircraft
acquisition. “Construction in progress” and “Predelivery payments” are not depreciated until such time
82 *SGVFS162312*
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when the construction of the relevant assets is completed and when assets are available for their
intended use.
Leases
Right-of-use assets
The Group recognizes right-of-use assets at the commencement date of the lease (i.e., the date the
underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated
depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost
of right-of-use assets includes the amount of lease liabilities recognized, initial direct costs incurred,
and lease payments made at or before the commencement date less any lease incentives received.
The right-of-use assets are classified in the consolidated statement of financial position as part of
property and equipment. Unless the Group is reasonably certain to obtain ownership of the leased asset
at the end of the lease term, the recognized right-of-use assets are depreciated on a straight-line basis
over the shorter of its estimated useful life and the lease term, as follows:
Number of Years
Passenger aircraft 4 to 20
Engines 4 to 20
Ground property and equipment 3 to 8
Leasehold improvements (whichever is shorter 4 to 12
between the lease term or life of the
improvements)
If the Group is reasonably certain to obtain ownership of the leased asset at the end of the lease term,
the right-of-use assets are depreciated based on the estimated useful life of the underlying assets.
Lease liabilities
At the commencement date of the lease, the Group recognizes lease liabilities measured at the present
value of lease payments to be made over the lease term, which are classified as long-term obligations
in the consolidated statement of financial position. The lease payments include fixed payments
(including in substance fixed payments) less any lease incentives receivable, variable lease payments
that depend on an index or a rate, and amounts expected to be paid under residual value guarantees.
The lease payments also include the exercise price of a purchase option reasonably certain to be
exercised by the Group and payments of penalties for terminating a lease, if the lease term reflects the
Group exercising the option to terminate. The variable lease payments that do not depend on an index
or a rate are recognized as expense in the period on which the event or condition that triggers the
payment occurs.
In calculating the present value of lease payments, the Group uses the incremental borrowing rate at
the lease commencement date if the interest rate implicit in the lease is not readily determinable. After
the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest
and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is
remeasured if there is a modification, a change in the lease term, a change in the in-substance fixed
lease payments or a change in the assessment to purchase the underlying asset.
Short-term leases and leases of low-value assets

The Group applies the short-term lease recognition exemption to its short-term leases (i.e., those leases
that have a lease term of 12 months or less from the commencement date and do not contain a purchase
option). It also applies the lease of low-value assets recognition exemption to leases of office equipment
83 *SGVFS162312*
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that are considered of low value. Lease payments on short-term leases and leases of low-value assets
are recognized as expense on a straight-line basis over the lease term.
Group as Lessee
Finance leases, which transfer to the Group substantially all the risks and rewards incidental to
ownership of the leased item, are capitalized at the inception of the lease at the fair value of the leased
property or, if lower, at the present value of the minimum lease payments. Obligations arising from
aircraft under finance lease agreements are classified in the consolidated statement of financial position
as part of “Long-term obligations”.
Lease payments are apportioned between financing charges and reduction of the lease liability so as to
achieve a constant rate of interest on the remaining balance of the liability. Financing charges are
charged directly against profit or loss.
Leases where the lessor retains substantially all the risks and rewards of ownership of the asset are
classified as operating leases. Operating lease expense is recognized in profit or loss on a straight-line
basis over the terms of the lease agreements. Contingent rents (e.g., lease payments that are based on
market indices) are charged as expense in the period in which they are incurred. The aggregate benefit
of incentives provided by the lessor is recognized as a reduction of rental expense over the lease term
on a straight-line basis.
A sale and leaseback transaction involves the sale of an asset and the leasing back of the same asset. If
a sale and leaseback transaction results in an operating lease, and it is clear that the transaction is at fair
value, any profit or loss is recognized immediately. If the sale price is below fair value, any profit or
loss is recognized immediately except that, if the loss is compensated for by future lease payments at
below market price, it is deferred and amortized in proportion to the lease payments over the period for
which the asset is expected to be used. If the sale price is above fair value, the excess over fair value
is deferred and amortized over the period for which the asset is expected to be used. If a sale and
leaseback transaction results in a finance lease, any difference between the sales proceeds and the
carrying amount is deferred and amortized over the lease term.
Group as Lessor
Leases where the Group does not transfer substantially all the risks and rewards of ownership of the
assets are classified as operating leases. Lease income is recognized on a straight-line basis over the
lease term. Initial direct costs incurred in negotiating operating leases are added to the carrying amount
of the leased asset and recognized over the lease term on the same basis as the rental income.
Contingent rents are recognized as revenue in the period in which they are earned.
Asset Restoration Obligation (ARO)

The Group is required under various aircraft lease agreements to restore the leased aircraft to their
original condition and to bear the cost of dismantling and restoration at the end of the lease term. For
certain lease agreements, the Group provides for these costs over the terms of the leases through
contribution to a maintenance reserve fund (MRF), based on aircraft hours flown and engine cycles
until the next scheduled checks. If the estimated cost of dismantling and restoration is expected to
exceed the cumulative MRF or where the lease agreement does not require contribution of MRF, an
additional obligation is recognized over the remaining term of the leases. The amount of obligation is
carried at amortized cost using the effective interest method.
84 *SGVFS162312*
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Investment Properties
Investment properties include parcels of land, buildings and improvements that are not used in
operations.
Investment properties are measured initially at cost, including any transaction costs. The carrying
amount includes the cost of replacing part of an existing investment property at the time that cost is
incurred (if the recognition criteria are met) and excludes the costs of day-to-day servicing of an
investment property.
Investment properties (except land) are subsequently measured at cost less accumulated depreciation
and any impairment in value. Land is subsequently carried at cost less any impairment in value.
Depreciation of depreciable investment properties, which commences when the asset is available for
its intended use, is calculated on a straight-line basis over the estimated useful lives ranging from six
to eight years.
Depreciation ceases at the earlier of the date that the item is classified as held for sale (or included in a
disposal group that is classified as held for sale) in accordance with PFRS 5 and the date the asset is
derecognized.
Transfers are made to investment properties when, and only when, there is a change in use, evidenced
by cessation of owner-occupation or commencement of an operating lease to another party. Transfers
are made from investment properties when, and only when, there is a change in use, evidenced by
commencement of owner-occupation or commencement of development with a view to sell.
When an item of property and equipment previously carried at revalued amount is transferred to
investment properties, the carrying value at the date of reclassification is retained as the new cost of the
investment property. The related revaluation increment is closed to retained earnings or deficit.
Investment properties are derecognized when they are either disposed of or permanently withdrawn
from use and no future economic benefit is expected from their disposal. Any gains or losses on the
retirement or disposal of an investment property are recognized in profit or loss.
Impairment of Property and Equipment, including Right-of-Use Assets, and Investment Properties
The carrying values of property and equipment, including right-of-use assets, and investment properties
are reviewed for impairment when events or changes in circumstances indicate that the carrying values
may not be recoverable. If any such indication exists and where the carrying values exceed the estimated
recoverable amounts, the assets or cash generating units (CGU) are written down to their recoverable
amounts. The recoverable amount is the greater of fair value less costs to sell and value-in-use. In
assessing value-in-use, the estimated future cash flows are discounted to their present value using a
pretax discount rate that reflects current market assessments of the time value of money and the risks
specific to the asset. For an asset that does not generate largely independent cash inflows, the
recoverable amount is determined for the CGU to which the asset belongs. Impairment losses, if any,
are recognized in profit or loss.
Recovery of impairment losses recognized in prior periods is recorded when there is an indication that
the impairment losses recognized for the asset no longer exist or have decreased. The recovery is
recognized in profit or loss. However, the increased carrying amount of the asset due to reversal of an
impairment loss is recognized only to the extent that it does not exceed the carrying amount (net of
accumulated depreciation and amortization) that would have been determined had impairment loss not
been recognized for that asset in prior years.
85 *SGVFS162312*
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Compensation from third parties for the items of property and equipment that were impaired is included
in profit or loss when the compensation becomes receivable (i.e., recovery becomes virtually certain).
Impairment or losses of items of property and equipment, related claims for or payments of
compensation from third parties and any subsequent purchase or construction of replacement assets are
considered as separate economic events and are accounted for separately.
Provisions and Contingencies

Provisions are recognized when (a) the Group has a present obligation (legal or constructive) as a result
of a past event; (b) it is probable that an outflow of resources embodying economic benefits will be
required to settle the obligation; and (c) a reliable estimate of the amount of the obligation can be made.
Where the Group expects a provision to be reimbursed, for example, under an insurance contract, the
reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain.
If the effect of the time value of money is material, provisions are determined by discounting the
expected future cash flows at a pretax rate that reflects current market assessments of the time value of
money and, where appropriate, the risks specific to the liability. Where discounting is used, the increase
in the provision due to the passage of time is recognized as interest expense.
Contingent liabilities are not recognized in the consolidated statement of financial position. They are
disclosed in the notes to consolidated financial statements unless the possibility of an outflow of
resources embodying economic benefits is remote. A contingent asset is not recognized in the
consolidated statement of financial position but disclosed in the notes to consolidated financial
statements when an inflow of economic benefits is probable. If it is virtually certain that an inflow of
economic benefits will arise, the asset and the related income are recognized in the consolidated
financial statements.
Deposit from Non-controlling Interest of a Subsidiary

Deposit from non-controlling interest of a subsidiary generally represent funds received by PAL which
it records as such with a view to applying the same as payment for a future additional issuance of shares
or increase in capital stock.
The Group classifies deposit from non-controlling interest of a subsidiary under non-controlling interest
as a separate account from capital stock if, and only if, all of the following elements are present as of
the end of the reporting period:
The unissued authorized capital stock of the entity is insufficient to cover the amount of shares
indicated in the contract;
There is BOD’s approval on the proposed increase in authorized capital stock (for which a
deposit was received by PAL);
There is stockholders’ approval of said proposed increase; and
The application for the approval of said proposed increase has been filed with the Philippine
SEC.
If any of the foregoing elements are not present, the deposit is recognized as a liability.
Equity (Capital Deficiency)

Capital stock is measured at par value of all shares issued. Incremental costs incurred directly
attributable to the issuance of new shares are shown in equity as a deduction from proceeds, net of tax.
When the shares are sold at premium, the difference between the proceeds and the par value is credited
to the “Additional paid-in capital” account.
86 *SGVFS162312*
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Deficit represents the cumulative balance of net income or loss, net of any dividend declaration.
Treasury Stock
Where the Parent Company purchases its own capital stock (treasury shares), the consideration paid,
including any directly attributable incremental costs (net of related taxes), is deducted from equity until
the shares are cancelled, reissued or disposed of. Where such shares are subsequently sold or reissued,
any consideration received, net of any directly attributable incremental transaction costs and the related
income tax effect, is included in equity attributable to the Parent Company’s equity holders.
Revenue from Contracts with Customers

Revenue from contracts with customers is recognized when control of goods or services is transferred
to the customer at an amount that reflects the consideration to which the Group expects to be entitled
in exchange for the goods and services. The specific recognition criteria for each type of revenue are
as follows:
Passenger ticket, cargo way-bills and related fuel and insurance surcharges are recognized as revenue
when the related services are rendered (e.g., over time as the passengers and cargo are flown or lifted).
Customer payments for services which have not yet been rendered are classified as contract liabilities
under “Unearned transportation revenue” account in the consolidated statement of financial position.
Revenue from charter, mail, excess baggage and other transport-related and ancillary services revenue
are recognized when the related services have been rendered.
Revenue from inflight sales is recognized at the point in time when control of the asset is transferred to
the customer, generally on the delivery and acceptance by the customers of the goods.
Revenue from estimated breakage (expiration) of unused passenger tickets are recognized based on the
historical expiration experience of the Group on the unused passenger tickets.
Contract Balances
Contract assets
A contract asset is the right to consideration in exchange for goods or services transferred to the
customer. If the Group performs by transferring goods or services to a customer before the customer
pays consideration or before payment is due, a contract asset is recognized for the earned consideration
that is conditional.
Trade receivables
A receivable represents the Group’s right to an amount of consideration that is unconditional (i.e., only
the passage of time is required before payment of the consideration is due). Refer to accounting policies
of financial assets in section “Financial instruments - initial recognition and subsequent measurement”.
Contract liabilities
A contract liability is the obligation to transfer goods or services to a customer for which the Group has
received consideration (or an amount of consideration is due) from the customer. If a customer pays
consideration before the Group transfers goods or services to the customer, a contract liability is
recognized when the payment is made or the payment is due (whichever is earlier). Contract liabilities
are recognized as revenue when the Group performs under the contract.
87 *SGVFS162312*
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Contract Liability Under Frequent Flyer Program

PAL operates a frequent flyer program called “Mabuhay Miles”. A portion of passenger revenue
attributable to the award of frequent flyer miles, estimated based on expected utilization of these
benefits, is deferred until utilized. The fair value of the consideration received in respect of the initial
sale is allocated to the award credits based on its relative fair value. The deferred revenue is included
under “Reserves and other noncurrent liabilities” in the consolidated statement of financial position.
Any remaining unutilized benefits are recognized as revenue upon redemption or expiry.
Interest and Dividend Income

Interest on cash in banks, cash equivalents and other short-term and long-term cash investments is
recognized as interest accrues using the effective interest method. Dividend income from financial
assets at FVTOCI is recognized when the Group’s right to receive payment is established.
Short-term Employee Benefits

Short-term employee benefits include items such as salaries and wages, social security contributions
and nonmonetary benefits, if expected to be settled wholly within 12 months after the reporting date in
which the employees rendered the related services. Short-term employee benefits are recognized as
expense as incurred. When an employee has rendered service to the Group during the reporting period,
the Group recognizes the undiscounted amount of short-term employee benefits expected to be paid in
exchange for that service as a liability (accrued expense), after deducting any amount already paid.
Retirement Benefits Cost and Other Long-term Employee Benefits

Accrued employee benefits, as presented in the consolidated statement of financial position, consist of
retirement benefits under defined benefit plans and other long-term employee benefits.
Retirement benefits - defined benefit plans

Accrued retirement benefits is the present value of the defined benefit obligation at the end of the
reporting period reduced by the fair value of plan assets, adjusted for any effect of limiting a net defined
benefit asset to the asset ceiling. The asset ceiling is the present value of any economic benefits
available in the form of refunds from the plan or reductions in future contributions to the plan.
The cost of providing benefits under the defined benefit plans is actuarially determined using the
projected unit credit method. The retirement benefits cost comprises of service cost, net interest on the
net defined benefit liability or asset and remeasurements of net defined benefit liability or asset.
Service costs which include current service costs, past service costs and gains or losses on non-routine
settlements are recognized as expense in profit or loss. Past service costs are recognized when plan
amendment or curtailment occurs. These amounts are calculated periodically by independent qualified
actuaries.
Net interest on the net defined benefit liability or asset is the change during the period in the net defined
benefit liability or asset that arises from the passage of time which is determined by applying the
discount rate based on government bonds to the net defined benefit liability or asset at the beginning of
the year, taking account of any changes in the net defined benefit liability or asset during the period as
a result of contribution or benefit payment. Net interest on the net defined benefit liability or asset is
recognized as expense or income in profit or loss.
Remeasurements comprising actuarial gains and losses, difference between interest income and actual
return on plan assets and any change in the effect of the asset ceiling (excluding net interest on defined
benefit liability) are recognized immediately in OCI in the period in which they arise. Remeasurements
are not reclassified to profit or loss in subsequent periods.
88 *SGVFS162312*
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Plan assets are assets that are held by a long-term employee benefit fund. Plan assets are not available
to the creditors of the Group, nor can they be paid directly to the Group. The fair value of plan assets
is based on market price information. When no market price is available, the fair value of plan assets is
estimated by discounting expected future cash flows using a discount rate that reflects both the risk
associated with the plan assets and the maturity or expected disposal date of those assets (or, if they
have no maturity, the expected period until the settlement of the related obligations). If the fair value
of the plan assets is higher than the present value of the defined benefit obligation, the measurement of
the resulting defined benefit asset is limited to the present value of economic benefits available in the
form of refunds from the plan or reductions in future contributions to the plan.
The Group’s right to be reimbursed of some or all of the expenditures required to settle a defined benefit
obligation is recognized as a separate asset at fair value when and only when reimbursement is virtually
certain.
Termination benefits
Termination benefits are employee benefits provided in exchange for the termination of an employee’s
employment as a result of either the Group’s decision to terminate an employee’s employment before
the normal retirement date or an employee’s decision to accept an offer of benefits in exchange for the
termination of employment.
A liability and expense for termination benefit is recognized at the earlier of when the entity can no
longer withdraw the offer of those benefits and when the entity recognizes related restructuring costs.
Initial recognition and subsequent changes to termination benefits are measured in accordance with the
nature of the employee benefit, as either post-employment benefits, short-term employee benefits, or
other long-term employee benefits.
Other long-term employee benefits

Other long-term employee benefits such as vacation leave and sick leave commutation and retention
programs are measured using the projected unit credit method. Actuarial gains and losses on these
employee benefits are recognized in full in profit or loss.
Borrowing Costs
Borrowing costs are capitalized if they are directly attributable to the acquisition or construction of a
qualifying asset. Capitalization of borrowing costs commences when the activities to prepare the asset
are in progress and expenditures and borrowing costs are being incurred. Borrowing costs are
capitalized until the assets are substantially ready for their intended use.
To the extent that the Group borrows funds generally and uses them for the purpose of obtaining a
qualifying asset, the Group determines the amount of borrowing costs eligible for capitalization by
applying a capitalization rate to the expenditures on that asset. The capitalization rate shall be the
weighted average of the borrowing costs applicable to the borrowings of the Group that are outstanding
during the period, other than borrowings made specifically for the purpose of obtaining a qualifying
asset. The amount of borrowing costs that the Group capitalizes during a period shall not exceed the
amount of borrowing costs it incurred during that period. All other borrowing costs are expensed as
incurred.
Expenses
Expenses are recognized when incurred. These are measured at the fair value of the consideration paid
or payable.
89 *SGVFS162312*
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Other Comprehensive Income (Loss)

Other comprehensive income (loss) comprises items of income and expense (including items
previously presented under the consolidated statement of changes in equity) that are not recognized in
profit or loss for the year in accordance with PFRS. Other comprehensive income (loss) of the Group
includes gains and losses on changes in fair value of financial assets at FVTOCI, changes in revaluation
increment of property and equipment, remeasurement gains or losses on defined benefit plans, and
effect of foreign exchange translation of the assets and liabilities of PAL and FSL from its functional
currency into presentation currency of the Group.
Income Taxes
Current income tax
Current income tax assets and liabilities for the current and prior periods are measured at the amount
expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to
compute the amounts are those that have been enacted or substantively enacted as of end of reporting
period.
Current income tax relating to items recognized directly in equity is recognized in equity and not in
profit or loss. Management periodically evaluates positions taken in the tax returns with respect to
situations in which applicable tax regulations are subject to interpretation and establishes provisions
where appropriate.
Deferred income tax

Deferred income tax is provided using the liability method on all temporary differences between the
tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the
reporting date.
Deferred income tax liabilities are recognized for all taxable temporary differences, including asset
revaluations. Deferred income tax assets are recognized for all deductible temporary differences, carry
forward benefits of unused tax credits from the excess of minimum corporate income tax (MCIT) over
the regular corporate income tax and unused net operating loss carryover (NOLCO), to the extent that
it is probable that sufficient future taxable profits will be available against which the deductible
temporary differences and carry forward benefits of unused tax credits and unused NOLCO can be
utilized. Deferred income tax, however, is not recognized when it arises from the initial recognition of
an asset or liability in a transaction that is not a business combination and, at the time of the transaction,
affects neither the accounting profit nor taxable profit or loss. Deferred income tax liabilities are not
provided on nontaxable temporary differences associated with investments in domestic subsidiaries.
With respect to investments with other subsidiaries, deferred income tax liabilities are recognized
except where the timing of reversal of the temporary differences can be controlled by the parent or
investor and it is probable that the temporary difference will not reverse in the foreseeable future.
The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to
the extent that it is no longer probable that sufficient future taxable profits will be available to allow all
or part of the deferred income tax asset to be utilized. Unrecognized deferred income tax assets are
reassessed at each reporting date and are recognized to the extent that it has become probable that
sufficient future taxable profits will allow the deferred income tax asset to be recovered.
Deferred income tax assets and deferred income tax liabilities are measured at the tax rates that are
expected to apply in the period when the asset is realized or the liability is settled, based on tax rates
and tax laws that have been enacted or substantively enacted as of reporting date.
90 *SGVFS162312*
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Deferred income tax relating to items recognized outside profit or loss is recognized outside profit or
loss. Deferred income tax items are recognized in correlation to the underlying transaction either in
OCI or directly in equity.
Deferred income tax assets and deferred income tax liabilities are offset if a legally enforceable right
exists to set off current income tax assets against current income tax liabilities and the deferred income
taxes relate to the same taxable entity and the same taxation authority.
Creditable Withholding Taxes (CWTs)

CWTs, included in “Other current assets” account in the consolidated statement of financial position,
are amounts withheld from income subject to expanded withholding taxes. CWTs can be utilized as
payment for income taxes provided that these are properly supported by certificates of creditable tax
withheld at source subject to the rule on Philippine income taxation. CWTs which are expected to be
utilized as payment for income taxes within twelve (12) months are classified as current assets,
otherwise these are classified as noncurrent assets.
Foreign Currency-denominated Transactions and Translations

Transactions denominated in currencies other than the Philippine Peso are recorded using the exchange
rate prevailing at the date of the transaction. Outstanding monetary assets and liabilities denominated
in foreign currencies are translated using the closing rate of exchange at the end of the reporting period.
Any resulting foreign exchange gains or losses are taken to income or loss in the consolidated statement
of comprehensive income.
The functional currency of PAL is the US Dollar (USD). As of the reporting date, the assets and
liabilities of this subsidiary are translated into the presentation currency of the Group at the rate of
exchange ruling at the reporting date and its statement of comprehensive income accounts are translated
at the weighted average exchange rates for the year. The exchange differences arising on the translation
are recognized in the consolidated statement of comprehensive income and reported as a separate
component of equity as “Cumulative translation adjustment”. On disposal of a foreign subsidiary, the
deferred cumulative amount recognized in equity relating to that particular foreign operation shall be
recognized in profit or loss. Exchange differences arising from elimination of intragroup balances and
intragroup transactions are recognized in profit or loss.
Basic/Diluted Earnings (Loss) Per Share

Basic earnings (loss) per share is calculated based on net income (loss) and total comprehensive income
(loss) for the period. Earnings (loss) per share is calculated by dividing net income (loss) before other
comprehensive income or total comprehensive income (loss) for the period by the weighted average
number of issued and outstanding shares of stock during the period, after giving retroactive effect to
any stock dividends declared or stock rights exercised. The Group has no dilutive potential common
shares.
Events After the Reporting Date

Post year-end events that provide additional information about the Group’s position at the reporting
date (adjusting events), if any, are reflected in the consolidated financial statements. Post year-end
events that are not adjusting events are disclosed in the notes to consolidated financial statements when
material.
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4. Summary of Significant Accounting Judgments, Estimates and Assumptions
The preparation of these consolidated financial statements in accordance with PFRSs requires
management to make judgments, estimates and assumptions that affect the amounts reported in the
consolidated financial statements. These judgments, estimates and assumptions are based on
management’s evaluation of relevant facts and circumstances as of the end of the reporting period.
Future events may occur which will cause the assumptions used in arriving at the estimates to change.
The effects of any change in estimates are reflected in the consolidated financial statements as they
become reasonably determinable. Revisions to accounting estimates are recognized in the period in
which the estimate is revised if the revision affects only that period, or in the period of the revision and
future periods if the revision affects both current and future periods.
Judgments
In the process of applying the Group’s accounting policies, management has made the following
judgments, apart from those involving estimations, which have the most significant effect on amounts
recognized in the consolidated financial statements:
Use of going concern assumption

The use of the going concern assumption involves management making judgments, at a particular point
in time, about the future outcome of events or conditions that are inherently uncertain. The underlying
assumption in the preparation of the consolidated financial statements is that the Group has neither the
intention nor the need to liquidate. Management takes into account a whole range of factors and
assumptions which include, but are not limited to, payments of obligations based on restructured debts,
results of the negotiations with the lessors and creditors and approval of the Plan and positive projected
operating monthly cash flows in 2022 as a result of the gradual recovery in the travel industry and effect
of cost containment measures implemented in 2020 and early 2021, among others. Management
prepared the consolidated financial statements on a going concern basis as management has future plans
regarding the Group, as discussed in Note 2.
Determination of functional currency

Judgment is exercised in assessing various factors in determining the functional currency of each entity
within the Group, including prices of goods and services, competition, cost and expenses and other
factors including the currency in which financing is primarily undertaken by each entity. Additional
factors are considered in determining the functional currency of a foreign operation, including whether
its activities are carried as an extension of that of the Parent Company rather than being carried out with
significant autonomy.
The Parent Company, based on the relevant economic substance of the underlying circumstances, has
determined its functional currency to be the Philippine peso. It is the currency of the primary economic
environment in which it operates. The functional currency of PAL, its major subsidiary, has been
determined to be USD.
Recognition and measurement of revenue from contracts with customers and determination of the
timing of satisfaction of performance obligation
The Group applied the following judgments that significantly affect the determination of the amount
and timing of revenue from contracts with customers:
The Group assessed that performance obligation for passenger, cargo, ancillary and other services
are rendered to the customers over time. As a result, the Group recognized revenue based on the
extent of progress towards completion of the performance obligation. The selection of the method
to measure progress towards completion requires judgment.
92 *SGVFS162312*
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For the sale of goods, the Group assessed that performance obligation for sale of goods are satisfied
at a point in time. The Group uses its judgment on when a customer obtains control of the promised
goods. The Group has assessed that the actual delivery of the goods to the customer is the point in
time when the performance obligation has been satisfied.
Assessment of control on investees

The Group makes an assessment whether or not it controls an investee by considering all relevant facts
and circumstances that indicates that the Group is exposed, or has rights, to variable returns from its
involvement with the investee and has the ability to affect those returns through its power over the
investee. A reassessment is made if circumstances indicate that there are changes in these control
elements. The Group has significant influence over an investee if it only has the power to participate in
the financial and operating policy decisions, but not control or joint control over it. The Parent Company
has determined that it controls its subsidiaries.
An entity is considered a structured entity and included in consolidation even in case where the Group
owns less than one-half or none of the structured entity’s equity, when the substance of the relationship
indicates that the structured entity is being controlled by the Group. While PAL has no ownership
interest in PRC, the latter’s purpose is to facilitate PAL’s sale of receivables and obtain financing from
a third-party bank. In substance, the majority of the benefits from the activities of PRC flow to PAL
and ultimately to the Parent Company. Based on these facts and circumstances, management has
concluded that PAL has control over PRC, and therefore, included PRC in the consolidated financial
statements of the Group.
Classification of financial instruments

In 2015, 2017 and 2019, the Group sold its rights to the cash flows arising from certain credit card
receivables including future credit card receivables from sales in United States, for a cash consideration
of P=15.31 billion, P
=12.98 billion and P=5.06 billion, respectively. In 2015, 2018 and 2019, the Group
also sold its rights to the cash flows arising from passenger and cargo receivables denominated in
Japanese Yen through certain agents in Japan, including future receivables, for a cash consideration of
=9.42 billion, =
P P7.89 billion and =
P5.06 billion, respectively. The Group has determined that substantially
all the risks and rewards of the portfolios sold in 2015, 2017, 2018 and 2019 have been retained and
consequently, the receivables were not derecognized. The Group accounted for the transaction as a
collateralized borrowing and recorded the cash received as a financial liability. The carrying value of
these financial liabilities amounted to P
=31.00 billion and P=34.00 billion as of December 31, 2020 and
2019, respectively (see Note 15).
Classification of assets held for sale

The Group classifies a noncurrent asset as held for sale if its carrying amount will be recovered
principally through a sale transaction rather than through continuing use. For this to be the case, the
asset must be available for immediate sale in its present condition and its sale must be highly probable.
In 2019, management determined that certain aircraft and engines are available for sale in their present
condition within the next 12 months. Management reclassified these aircraft and engines from
“Property and equipment - at cost” into “Assets held for sale” in the consolidated statement of financial
position as of December 31, 2019 (see Note 10). In 2020, management reassessed that the potential
sale of these aircraft, previously classified as assets held for sale, with a net carrying amount of
=1.44 billion, is no longer highly probable. As a result, these aircraft were reclassified back to “Property
P
and equipment - at cost”.
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Determination of whether the Group is acting as principal or agent

Management exercises judgment in determining whether the Group is acting as a principal or as an
agent under its arrangements. Management has determined that PAL is acting as principal under the
Joint Marketing and Licensing Agreement and Block Space Code Share Agreement (Code Share
Agreement) considering that it has the primary responsibility of providing the service to the passengers,
bears the seat utilization and credit risks, and has significant control in setting the prices of the ticket
(see Note 18). Management, on the other hand, has determined that PAL is acting as an agent on other
codeshare arrangements where it is acting as the marketing airline considering that the risks and rewards
are with the operating airlines.
Determination of whether an arrangement contains a lease

Management exercises judgment in determining whether an arrangement is, or contains, a lease, which
requires an assessment of whether the fulfillment of the arrangement is dependent on the use of a
specific asset or assets and the arrangement conveys a right to use the asset. Management has
determined that its Code Share Agreement with Air Philippines Corporation (APC) does not contain a
lease considering that the fulfillment of the obligation is not restricted in the use of specific aircraft and
APC maintains the right to control and operate the aircraft (see Note 18).
Determination of lease term of contracts with renewal options

The Group determines the lease term as the non-cancellable term of the lease, together with any periods
covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods
covered by an option to terminate the lease, if it is reasonably certain not to be exercised.
The Group considers all relevant factors that create an economic incentive for it to exercise the renewal.
After the commencement date, the Group reassesses the lease term if there is a significant event or
change in circumstances that is within its control and affects its ability to exercise (or not to exercise)
the option to renew (e.g., a change in business strategy).
Classification of leases - Group as lessor

The Group has sublease agreements covering some of its aircraft lease arrangements with the original
lessors where it has determined that it has retained substantially all the risks and rewards incidental to
ownership of the leased assets. These leases are classified as operating subleases (see Note 24).
Determination of taxable profit (loss)

Upon adoption of the Philippine Interpretation IFRIC 23, the Group assessed whether it has any
uncertain tax position. The Group applies significant judgement in identifying uncertainties over its
income tax treatments. The Group determined, based on its consultation with its tax counsel, that it is
probable that its current income tax treatments will be accepted by the taxation authorities. Accordingly,
the interpretation did not have an impact on the consolidated financial statements.
Contingencies
The Group is involved in various labor disputes, litigations, claims and tax assessments that are normal
to its business. Based on the opinion of the Group’s legal counsels on the progress and legal grounds
of these cases, the Group believes that it may have a present obligation arising from a past event on
some cases but that their likely outcome and estimated potential cash outflow cannot be determined
reasonably as of this time. As such, no provision was made for these contingencies (see Note 16).
Estimates
The key assumptions concerning the future and other key sources of estimation and uncertainty at the
end of the reporting period, that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year are discussed as follows:
94 *SGVFS162312*
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Recognition and measurement of passenger and cargo revenue

Passenger and cargo sales are recognized as revenue over time when the related passengers and cargoes
are flown or lifted. Passenger tickets that are unused are recognized as revenue based on the expected
breakage (expiration) of the passenger ticket using the Group’s historical expiration experience. The
carrying amount of unearned transportation revenue as of December 31, 2020 and 2019 amounted to
=8.72 billion and =
P P16.16 billion, respectively. In 2020 and 2019, the Group earned revenue from its
contract liabilities as at January 1, 2020 and 2019 amounting to P =11.71 billion and P=16.24 billion,
respectively.
A portion of passenger revenue attributable to the award of frequent flyer miles is deferred until they
are utilized. The deferment of the revenue is estimated based on historical trends of breakage and
redemption, which are then used to project the estimated utilization of the miles earned. The remaining
unredeemed miles are measured at fair value estimated using the applicable fare based on the historical
redemption. Changes in the estimates have a significant effect on the Group’s financial results.
Deferred revenue included as part of “Reserves and other noncurrent liabilities” amounted to
=3.61 billion and =
P P3.42 billion as of December 31, 2020 and 2019, respectively (see Note 16).
Provision for ECL of trade receivables and contract assets

The Group uses a provision matrix to calculate ECLs for trade receivables and contract assets. The
provision rates are based on days past due for groupings of various agents and customer segments that
have similar loss patterns (i.e., by geography, customer type and rating).
The provision matrix is initially based on the Group’s historical observed default rates. The Group will
calibrate the matrix to adjust the historical credit loss experience with forward-looking information.
For instance, if forecast economic conditions (e.g., gross domestic product) are expected to deteriorate
over the next year which can lead to an increased number of defaults in the airline sector, the historical
default rates are adjusted. At every reporting date, the historical observed default rates are updated and
changes in the forward-looking estimates are analyzed.
The assessment of the correlation between historical observed default rates, forecast economic
conditions and ECLs is a significant estimate. The amount of ECLs is sensitive to changes in
circumstances and of forecast economic conditions. The Group’s historical credit loss experience and
forecast of economic conditions may also not be representative of debtor’s actual default in the future.
The carrying value of receivables, net of allowance for ECL, as of December 31, 2020 and 2019
amounted to = P18.63 billion and P =20.03 billion, respectively. The allowance for ECL as of
December 31, 2020 and 2019 amounted to = P4.86 billion and P
=4.54 billion, respectively (see Note 6).
Determination of fair value of financial instruments (including derivatives)

The Group initially records all financial instruments at fair value and subsequently carries certain
financial assets and financial liabilities at fair value, which requires use of estimates and judgment.
Valuation techniques are used particularly for financial assets and financial liabilities (including
derivatives) that are not quoted in an active market. Where valuation techniques are used to determine
fair values (e.g., discounted cash flow, option models), they are periodically reviewed by qualified
personnel who are independent of the trading function. All models are calibrated to ensure that outputs
reflect actual data and comparative market prices. To the extent practicable, models use only
observable data as valuation inputs. However, other inputs such as credit risk (whether that of the
Group or the counterparties), forward prices, volatilities and correlations, require management to
develop estimates or make adjustments to observable data of comparable instruments. The amount of
changes in fair values would differ if the Group uses different valuation assumptions or other acceptable
methodologies. Any change in fair value of these financial instruments (including derivatives) would
95 *SGVFS162312*
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affect either profit or loss or other comprehensive income. The fair value of the Group’s financial assets
and financial liabilities are presented in Note 27.
Determination of net realizable value of expendable parts, fuel, materials and supplies
The Group’s estimates of the net realizable values of expendable parts, fuel, materials and supplies are
based on the most reliable evidence (e.g., age and physical condition of the inventory) available at the
time the estimates are made of the amount that these assets are expected to be realized. A new
assessment is made of the net realizable value in each subsequent period. When the circumstances that
previously caused expendable parts, fuel, materials and supplies to be written down below cost
no longer exist or when there is a clear evidence of an increase in net realizable value because of change
in economic circumstances, the amount of the write-down is reversed so that the new carrying amount
is the lower of the cost and the revised net realizable value. The carrying amount of expendable
parts, fuel, materials and supplies as of December 31, 2020 and 2019 amounted to
=3.72 billion and =
P P5.12 billion, respectively. The allowance for expendable parts obsolescence
amounted to = P948.12 million and = P833.29 million as of December 31, 2020 and 2019, respectively
(see Note 7).
Valuation of property and equipment under revaluation basis

The Group’s buildings and improvements are carried at revalued amounts, which approximate their fair
values at the date of the revaluation, less any subsequent accumulated depreciation and any
accumulated impairment losses. The valuations of buildings and improvements are performed by
professionally qualified independent appraisers using generally acceptable valuation techniques and
methods. The key assumptions used to determine the fair value of these assets and sensitivity analyses
are disclosed in Note 10. Revaluations are made regularly to ensure that the carrying amounts do not
differ materially from those which would be determined using fair values at reporting date.
Management believes that the basis of fair market value is still appropriate considering that there are
no significant changes in the properties and the surrounding area from the date of valuation up to and
from the financial reporting date. The revaluation increment, net of related deferred income tax, in the
valuation of these assets based on appraisal reports in December 2020 and 2019 amounted to
=627.68 million and P
P =686.29 million as of December 31, 2020 and 2019, respectively (see Note 19).
The carrying value of property and equipment carried at appraised value amounted to
=1.00 billion and =
P P1.16 billion as of December 31, 2020 and 2019, respectively (see Note 10).
Valuation of assets held for sale

The Group measures its assets held for sale at the lower of their carrying amount and fair value less
costs to sell. Management has determined the fair value less costs to sell of the Group’s assets
held for sale based on offer price of prospective buyers. In 2019, the Group recognized an impairment
loss of =
P72.95 million for the aircraft and engine intended to be sold in 2020 (see Note 10). In 2020,
the Group ceased to classify certain aircraft as asset held for sale and measured these aircraft at carrying
amount before the asset was classified as held for sale, adjusted for any depreciation that would have
been recognized had the asset not been classified as held for sale. As a result, the Group recognized an
impairment loss of =P161.72 million in 2020 (see Note 10).
The carrying value of assets held for sale as of December 31, 2020 and 2019 amounted to
=115.26 million and =
P P1.72 billion, respectively (see Note 10).
Classification and measurement of repairs and maintenance cost and ARO

The Group entered into several agreements with maintenance service providers relating to the periodic
inspections and overhauls during the life of the aircraft and aircraft parts. Management assessed and
estimated which portion of the cost incurred for the repairs, maintenance and overhauls under these
agreements has the economic effect of extending the useful lives of the aircraft and engines, hence, can
be capitalized. Other repairs and maintenance costs are expensed as incurred.
96 *SGVFS162312*
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Moreover, management estimates certain repairs and maintenance costs to be accrued as of

December 31, 2020 based on the open work orders and other variable factors. Total aircraft-related
repairs and maintenance costs recognized in profit or loss amounted to P =11.99 billion in 2020,
=20.04 billion in 2019 and =
P P19.72 billion in 2018 (see Note 20). Accrued maintenance costs as of
December 31, 2020 and 2019 amounted to P =13.79 billion and P
=13.31 billion, respectively (see Note
14).
The Group is also contractually committed to return a number of aircraft held under operating leases to
the lessors in a physical condition agreed at the inception of each lease. PAL estimates the costs of
heavy maintenance on the leased aircraft and engines required on the redelivery to the lessor, and
recognizes an obligation for the excess of estimated costs over the cumulative MRF or for the total
estimated costs where the lease agreement does not require contribution of MRF. In 2018, the Group
reversed the provision for ARO as the existing MRF has been assessed to be sufficient to cover the
restoration cost upon redelivery of the related aircraft to the lessors (see Note 16). As of
December 31, 2020 and 2019, provision for ARO amounted to nil because management assessed that
the cumulative balance of MRF is sufficient to cover the estimated costs of heavy maintenance on the
lease aircraft and engines required on the redelivery to the lessor.
Estimation of useful lives and residual values of property and equipment

The Group estimates the useful lives of property and equipment, including right-of-use assets, based
on internal technical evaluation and experience with similar assets. The estimated useful lives and
residual values are reviewed periodically and updated if expectations differ from previous estimates
due to physical wear and tear, technical and commercial obsolescence and other limits on the use of the
assets. In 2018, management recognized impairment loss amounting to P =629.16 million on certain
passenger aircraft that will be early retired (see Note 10). The carrying amount of depreciable property
and equipment, net of accumulated depreciation and impairment, amounted to = P169.38 billion and
=231.88 billion as of December 31, 2020 and 2019, respectively (see Note 10).
P
Impairment of property and equipment and investment properties

The Group determines whether its property and equipment, including right-of-use assets, and
investment properties are impaired, when events or changes in circumstances indicate that the carrying
values may not be recoverable. If any such indication exists and where the carrying values exceed the
estimated recoverable amounts, the assets are written down to their recoverable amounts. The
recoverable amount of property and equipment, including right-of-use assets, and investment properties
is the greater of the asset’s fair value less costs to sell and value-in-use. Determination of impairment
of property and equipment, including right-of-use assets, and investment properties requires an
estimation of the value-in-use of the CGU to which the assets belong. Estimating the value-in-use
requires the Group to make an estimate of the expected future cash flows from the CGU and applying
an appropriate discount rate in order to calculate the present value of those cash flows. In discounting,
the Group uses a discount rate based on the weighted average cost of capital adjusted to reflect the way
that the market would assess the specific risks associated with the cash flow and exclude risks that are
not relevant to the cash flow. Other assumptions used in projecting the future cash flows include
passenger load factor, passenger yield, fuel surcharge rate and fuel costs, among others.
In 2018, the Group recognized impairment loss amounting to = P629.16 million for the aircraft that will
be early retired (see Note 10). In 2019, the Group recognized an impairment loss for the vessels and
terminal under construction of MMET totaling to =P773.70 million (see Note 10).
In 2020, the Group recognized impairment loss amounting to P =14.94 million for its CGU based on the
estimation of its value-in-use. The Group also recognized in 2020 an impairment loss amounting to
=16.84 million, for certain right-of-use assets that will be early terminated in 2021 (see Note 10).
P
97 *SGVFS162312*
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The Group also recognized an additional impairment loss for the vessels of MMET amounting to
=0.05 million in 2020 (see Note 10).
P
As of December 31, 2020 and 2019, the aggregate carrying value of the Group’s property and
equipment, including right-of-use assets, and investment properties amounted to =
P176.92 billion and
=
P240.99 billion, respectively (see Notes 10 and 11).
Valuation of lease liabilities and right-of-use assets

The application of PFRS 16 requires the Group to make judgments that affect the valuation of the lease
liabilities and the valuation of right-of-use assets. These include (a) determining contracts in scope of
PFRS 16, (b) determining the contract term, (c) determining the interest rate used for discounting of
future cash flows.
The lease term determined by the Group comprises non-cancellable period of lease contracts, together
with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or
any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised.
For lease contracts with indefinite term the Group estimates the length of the contract to be equal to the
economic useful life of non-current assets located in the leased property and physically connected with
it or determines the length of the contract to be equal to the average or typical market contract term of
particular type of lease. The same economic useful life is applied to determine the depreciation rate of
right-of-use assets.
The present value of the lease payment is determined using the discount rate representing the rate of
interest rate swap applicable for currency of the lease contract and for similar tenor, corrected by the
average credit spread of entities with rating similar to the Group’s rating, observed in the period when
the lease contract commences or is modified.
The carrying value of lease liabilities and right-of-use assets amounted to =

P152.03 billion and
=151.34 billion as of December 31, 2020 and =
P P174.60 billion and =P216.73 billion as of
December 31, 2019, respectively (see Notes 10 and 15).
Estimation of retirement and other long-term employee benefits cost

The Group’s retirement and other long-term benefits costs relating to its defined benefit plans are
actuarially computed which entail using certain assumptions like discount rates and future salary
increases. Due to the complexities involved in the valuation and its long-term nature, a defined benefit
obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each
reporting date.
In determining the appropriate discount rate, management considers the interest rates of long-term
Philippine government bonds to correspond with the expected term of the defined benefit obligation.
Further details about pension obligations are disclosed in Note 21. Accrued employee benefits as of
December 31, 2020 and 2019 amounted to P =11.63 billion and P=12.54 billion, respectively
(see Note 21).
Provisions
The Group provides for present obligations (legal or constructive) where it is probable that there will
be an outflow of resources embodying economic benefits that will be required to settle the said
obligations. Management exercises judgment in assessing the probability of the Group becoming
liable. An estimate of the provision is based on known information as of reporting date. The amount
of provision is being reassessed at least on an annual basis to consider new and relevant information.
98 *SGVFS162312*
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Provisions recognized amounted to P

=97.75 million as of December 31, 2020 and
2019, respectively (see Note 16).
Recognition of deferred income tax assets

The Group assesses at each reporting date and recognizes deferred income tax assets to the extent of
probable future taxable profits and reversing taxable temporary differences that will allow the deferred
income tax assets to be utilized. Management uses judgment and estimates in assessing the probability
and level of future taxable profits, considering management’s future plan of actions, including the
timing of reversal of deferred income tax liability, aided by forecasting and budgeting techniques. In
2020, the Group did not recognize deferred income tax assets on deductible temporary differences
amounting to P
=81.67 billion since based on the projection, not all temporary differences will be realized
(see Note 22). Deferred income tax assets recognized amounted to = P41.54 billion and =
P52.42 billion as
of December 31, 2020 and 2019, respectively (see Note 22).
5. Cash and Cash Equivalents
2020 2019
Cash on hand and in banks (Note 18) P
=2,163,599 =9,065,868
P
Cash equivalents (Note 18) 194,048 6,038,144
P
=2,357,647 =15,104,012
P
Cash in banks and cash equivalents earned interest at the respective bank deposit rates totaling
=189.26 million, =
P P190.59 million and =
P106.47 million for the years ended December 31, 2020, 2019
and 2018, respectively (included under “Other income (charges) - net” in the consolidated statements
of comprehensive income).
Cash and cash equivalents used to collateralize margin call requirements on fuel derivatives are
presented as part of “Other current assets” (see Note 8), while those used to collateralize various surety
bonds issued in connection with certain litigations and sinking fund related to asset-backed securities
are presented as part of “Other noncurrent assets” (see Note 12).
6. Receivables
2020 2019
General traffic (Note 15)* P
=6,716,924 =7,752,325
P
Related parties (Note 18) 9,343,445 9,290,318
Non-trade** 7,429,211 7,528,224
23,489,580 24,570,867
Less allowance for ECL (4,860,744) (4,537,325)
P
=18,628,836 =20,033,542
P
*General traffic includes receivables pledged as collaterals for secured loans amounting to =
P389,687 as of December 31, 2019
(nil as of December 31, 2020).
**Non-trade receivables include, among others, accounts under litigation, receivables from employees and other receivables.
Receivables attributable to general traffic are noninterest-bearing and are generally on a 5 to 60-day
term.
99 *SGVFS162312*
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Movements in allowance for ECL as of December 31 presented by class, are as follows:
2020
General Traffic Related Parties Non-trade Total
Balance at beginning of year P
=906,873 P
=61,370 P
=3,569,082 P
=4,537,325
Charges for the year 266,704 96,766 223,403 586,873
Reversals for the year (40,627) – 336 (40,291)
Foreign exchange difference (35,144) (3,166) (184,853) (223,163)
Balance at end of year P
=1,097,806 P
=154,970 P
=3,607,968 P
=4,860,744
2019
Balance at beginning of year =1,136,219
P =26,711
P =4,958,881
P =6,121,811
P
Reversals for the year (160,657) – (330,844) (491,501)
Accounts written off (141,605) – (1,075,889) (1,217,494)
Foreign exchange difference (29,340) (1,791) (155,685) (186,816)
Balance at end of year =906,873
P =61,370
P =3,569,082
P =4,537,325
P
2018
Balance at beginning of year =1,543,762
P =58,718
P =4,202,808
P =5,805,288
P
Reversals for the year (604,577) (36,333) (168,151) (809,061)
Foreign exchange difference 69,885 3,117 223,070 296,072
Balance at end of year =1,136,219
P =26,711
P =4,958,881
P =6,121,811
P
The net provisions for (reversals of) impairment losses on receivables recognized in the consolidated
statements of comprehensive income under “General and administrative expenses” amounted to
=546.58 million, (P
P =180.18 million) and =P20.45 million in 2020, 2019 and 2018, respectively.
The Group uses a provision matrix to calculate ECLs (provisioning rates) based on days past due for
groupings of various agents and customer segments that have similar loss patterns. The historical loss
rates are credit adjusted by forward-looking estimates (called overlay).
The Group determines allowance for each significant receivable on an individual basis. Among the
factors that the Group considers in assessing impairment is the inability to collect from the counterparty
based on the contractual terms of the receivables. Receivables included in the specific assessment are
the accounts that have been endorsed to the legal department, nonmoving accounts receivable, accounts
of defaulted agents and accounts from closed stations.
7. Expendable Parts, Fuel, Materials and Supplies
2020 2019
At cost:
Expendable parts P
=1,720,808 =2,546,406
P
Fuel 609,695 1,500,941
Materials and supplies 401,332 485,953
2,731,835 4,533,300
At net realizable value - expendable parts 988,276 587,704
P
=3,720,111 =5,121,004
P
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The cost of expendable parts carried at net realizable value amounted to P =1.94 billion and
=1.42 billion as of December 31, 2020 and 2019, respectively. Provisions for inventory obsolescence
P
amounted to =P39.14 million in 2020 and =
P364.50 million in 2019. Reversal of provision for inventory
obsolescence amounted to P =59.47 million in 2018. Expendable parts recognized as maintenance
expense amounted to = P0.40 billion in 2020, =
P1.06 billion in 2019 and = P1.11 billion in 2018
(see Note 20).
8. Other Current Assets
2020 2019
Derivative assets (Notes 26 and 27) P
=4,162,627 =2,204,918
P
Deposits and prepayments 2,262,398 2,195,562
Security deposits (Note 5) 691,137 833,371
Others - net of allowance for probable loss of
=9,235 and =
P P8,056 as of December 31, 2020
and 2019, respectively (Note 18) 372,285 591,603
P
=7,488,447 =5,825,454
P
Deposits and prepayments pertain to advance payments for materials and supplies, prepaid rentals and
miscellaneous payments.
“Others” includes claims for compensation on damaged assets, other insurance claims and short-term
investments with maturity of more than three months.
9. Investments in Subsidiaries with Material Non-controlling Interest
APC and FSL are significant subsidiaries with material non-controlling interest. In 2017, the Parent
Company acquired 51% ownership in ZUMA (see Note 2), which in turn owns 99.97% interest in APC,
giving the Parent Company an effective interest of 50.98% in APC. The Group, through PAL, also
obtained control in FSL, previously accounted for as investment in associate, by increasing PAL’s
ownership interest in FSL from 40% to 65%, giving the Parent Company an effective interest of 64.29%
in FSL. The acquisitions of ZUMA and FSL have been accounted for in the consolidated financial
statements as business combination under common control using pooling of interest method of
accounting (see Note 4). Accordingly, the Group presented as non-controlling interests the ownership
interests which were not acquired by the Group. In 2018, PAL acquired 20% interest in FSL from a
non-controlling shareholder, thereby increasing PAL’s ownership interest to 85% and giving the Parent
Company an effective interest of 84.08% in FSL. The Group recognized P =1.36 billion in equity under
“Other equity reserves” as a result of the change in ownership interest in 2018, which pertains to the
excess of the net assets acquired over the consideration paid by the Group for the additional 20%
ownership interest in FSL. In 2019, PAL sold its 20% ownership interest in FSL to Trustmark Holdings
Corporation, thereby decreasing its ownership interest to 65% and the Parent Company’s effective
interest to 64.30%. The Group recognized = P48.32 million in equity under “Other equity reserves” as a
result of the change in ownership interest in 2019 which pertains to the excess of the consideration
received over net assets disposed.
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The following are the summarized financial information of APC and the Group’s share in equity, net
income and total comprehensive income of APC as of and for the years ended December 31:
2020 2019
Current assets P
=3,328,904 P3,696,682
=
Noncurrent assets 13,927,010 17,648,536
Current liabilities 3,549,621 2,329,434
Noncurrent liabilities 12,266,765 17,591,481
Equity 1,439,528 1,424,303
Equity attributable to:
Equity holders of the Parent 733,939 726,177
Non-controlling interest 705,589 698,126
2020 2019 2018

Revenue P
=6,567,595 =9,524,572
P =10,917,211
P
Net income 49,092 114,856 550,536
Total comprehensive income 22,080 230,439 609,352
Net income attributable to:
Equity holders of the parent 31,396 58,559 280,689
Non-controlling interest 17,696 56,297 269,847
Total comprehensive income
attributable to:
Equity holders of the parent 11,257 87,475 310,676
Non-controlling interest 10,823 84,097 298,676
The following are the summarized financial information of FSL translated to Philippine peso and the
Group’s share in equity, net income and total comprehensive income of FSL as of and for the years
ended December 31:
2020 2019
Current assets P
=11,387,292 P9,195,838
=
Noncurrent assets 30,835,207 38,651,938
Current liabilities 16,902,072 5,382,737
Noncurrent liabilities 3,080,311 17,467,117
Equity 22,240,116 24,997,922
Equity attributable to:
Equity holders of the parent 14,299,950 16,073,164
Non-controlling interest 7,940,167 8,924,758
2020 2019 2018

Revenue P
=5,275,055 =5,844,839
P =5,980,800
P
Net income (1,516,571) 2,130,413 2,017,345
(loss) (2,757,805) 1,202,702 3,111,042
Net income (loss) attributable to:
Equity holders of the parent (975,125) 1,369,813 1,696,224
Non-controlling interest (541,446) 760,600 321,121
(loss) attributable to:
Equity holders of the parent (1,773,213) 773,313 2,615,826
Non-controlling interest (984,592) 429,389 495,216
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10. Property and Equipment

2020
December 31, Disposals/ Reclassification Translation December 31,
2019 Additions Retirements and Others adjustment 2020
At Cost
Cost:
Passenger aircraft, engines and improvements
(Notes 15, 16 and 24) P
=8,985,919 P
=3,434 P
=– P
=14,609,182 (P
=934,951) P
=22,663,584
Rotable and reparable parts 13,047,874 606,302 (810,010) (32,619) (591,271) 12,220,276
Ground property and equipment (Note 15) 13,366,004 52,877 (160,951) 90,192 (688,279) 12,659,843
Vessels 1,163,853 – – 62,039 (62,039) 1,163,853
Right-of-use assets:
Passenger aircraft, engines and
leasehold improvements 262,521,337 3,820,648 (391,039) (7,526,304) (12,884,591) 245,540,051
Ground property and equipment 3,195,492 1,056,852 (985,135) (138,454) (158,278) 2,970,477
302,280,479 5,540,113 (2,347,135) 7,064,036 (15,319,409) 297,218,084
Accumulated depreciation:
Passenger aircraft, engines and leasehold improvements (3,810,868) (433,717) – (9,225,554) 508,197 (12,961,942)
Rotable and reparable parts (6,910,272) (824,000) 430,254 (11,467) 328,935 (6,986,550)
Ground property and equipment (Note 15) (11,069,493) (521,424) 145,284 (9,560) 580,185 (10,875,008)
Vessels (83,884) (30,066) – (4,524) 5,443 (113,031)
leasehold improvements (48,591,345) (23,464,621) 367,412 3,967,991 2,984,249 (64,736,314)
Ground property and equipment (394,969) (649,152) 295,681 49,736 28,855 (669,849)
(70,860,831) (25,922,980) 1,238,631 (5,233,378) 4,435,864 (96,342,694)
Accumulated impairment:
Passenger aircraft and engines – (32,778,692) – – 1,015,459 (31,763,233)
Vessels (539,487) (46,053) – (28,757) 30,243 (584,054)
Construction-in-progress (234,210) – – (12,484) 12,484 (234,210)
Rotable and reparable parts (154,526) – – – 7,971 (146,555)
(928,223) (32,824,745) – (41,241) 1,066,157 (32,728,052)
Net book value 230,491,425 (53,207,612) (1,108,504) 1,789,417 (9,817,388) 168,147,338
Construction in progress 5,832,075 2,830,568 – (2,143,001) (323,029) 6,196,613
Total P
=236,323,500 (P
=50,377,044) (P
=1,108,504) (P
=353,584) (P
=10,140,417) P
=174,343,951
At Revalued Amount
Buildings and improvements:
Revalued amount P
=1,191,773 P
=– P
=– (P
=99,966) (P
=58,253) P
=1,033,554
Accumulated depreciation and amortization (34,414) (125,801) – 125,580 1,783 (32,852)
Net Book Value P
=1,157,359 (P
=125,801) P
=– P
=25,614 (P
=56,470) P
=1,000,702
2019
December 31, Disposals/ Reclassification Translation December 31,
2018 Additions Retirements and Others adjustment 2019
At Cost
Cost:
Passenger aircraft, engines and improvements
(Notes 15 and 24) P4,158,825
= P1,310,278
= =–
P =3,768,487
P (P
=251,671) P8,985,919
=
Rotable and reparable parts 13,605,136 1,194,932 (1,162,897) 13,422 (602,719) 13,047,874
Ground property and equipment (Note 15) 13,772,127 677,320 (290,546) 74,793 (867,690) 13,366,004
Vessels 1,163,853 – – – – 1,163,853
leasehold improvements 259,751,969 18,217,175 – (8,484,893) (6,962,914) 262,521,337
Ground property and equipment 2,606,443 702,421 (3,343) – (110,029) 3,195,492
295,058,353 22,102,126 (1,456,786) (4,628,191) (8,795,023) 302,280,479
Accumulated depreciation:
Passenger aircraft, engines and leasehold improvements (1,671,710) (219,367) – (2,032,433) 112,642 (3,810,868)
Rotable and reparable parts (6,677,482) (850,314) 490,305 (284,942) 412,161 (6,910,272)
Ground property and equipment (Note 15) (11,474,509) (675,925) 258,685 99,827 722,429 (11,069,493)
Vessels (26,912) (59,289) – – 2,317 (83,884)
leasehold improvements (28,181,043) (23,429,966) – 4,121,560 (1,101,896) (48,591,345)
Ground property and equipment – (404,363) 561 – 8,833 (394,969)
(48,031,656) (25,639,224) 749,551 1,904,012 156,486 (70,860,831)
Accumulated impairment:
Passenger aircraft and engines (629,156) – – 629,156 – –
Vessels – (539,487) – – – (539,487)
Construction-in-progress – (234,210) – – – (234,210)
Rotable and reparable parts (160,442) – – – 5,916 (154,526)
(789,598) (773,697) – 629,156 5,916 (928,223)
Net book value 246,237,099 (4,310,795) (707,235) (2,095,023) (8,632,621) 230,491,425
Construction in progress 10,309,285 6,442,985 – (10,632,236) (287,959) 5,832,075
Total =256,546,384
P =2,132,190
P (P
=707,235) (P
=12,727,259) (P
=8,920,580) =236,323,500
P
At Revalued Amount
Buildings and improvements:
Revalued amount =1,368,281
P =–
P P–
= (P
=43,993) (P
=132,515) =1,191,773
P
Accumulated depreciation and amortization (152,728) (97,434) – 166,184 49,564 (34,414)
Net Book Value =1,215,553
P (P
=97,434) =–
P =122,191
P (P
=82,951) =1,157,359
P
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In 2018, the Group recognized an impairment loss of P

=629.16 million for the aircraft that will be early
retired.
In 2019, the Group recognized a total impairment loss of P

=773.70 million which pertains to vessels and
terminal under construction of MMET amounting to = P539.49 million and =P234.21 million, respectively.
In 2020, additional impairment of =
P0.05 million for the vessels was recognized.
In 2020, the Group recognized a total impairment loss of P

=14.94 million for the operating fleet. The
Group also recognized impairment loss amounting to =
P16.84 million for certain 14 aircraft under lease
that will be early terminated in 2021. Total impairment loss is included under “Accumulated
impairment - Passenger aircraft and engines”.
Construction in progress mainly includes predelivery payments for aircraft acquisition. Predelivery
payments include capitalized borrowing costs (see Notes 13 and 15).
Outstanding liabilities pertaining to acquisition of property and equipment, excluding lease liabilities
amounted to =
P61.90 million and = P88.21 million as of December 31, 2020 and 2019, respectively (see
Note 23). These are included under “Accounts payable” in the consolidated statements of financial
position.
Property and equipment with carrying value of = P1,235.73 million and P =540.48 million as of
December 31, 2020 and 2019, respectively, used to secure long-term debt are described in Note 15.
Movements in Fleet
Airbus 350-900
In 2019, the Group accepted the delivery of two Airbus 350-900 aircraft under sale and leaseback
arrangements with third party lessors. These aircraft are now utilized for non-stop flights to North
America and Europe.
Airbus 340-300
In 2019, the Group sold two Airbus 340-300 aircraft resulting to a gain of =
P90.74 million recognized
in “Other income (charges) - net” in the consolidated statements of comprehensive income.
Airbus 321-231 NEO (Airbus 321-271N and Airbus 321-271NX)

In 2020 and 2019, the Group accepted delivery of one Airbus 321-271NX aircraft under lease
arrangement with a third party lessor in each year. These aircraft are now utilized for flights to
destinations such as Sapporo, Brisbane and Sydney.
Airbus 320-200
In 2020 and 2019, the Group redelivered three and one Airbus 320-200 aircraft to its lessors,
respectively. In 2020 and 2019, the Group exercised its option to purchase four and five Airbus 320-
200 at the end of their respective lease terms, respectively.
DHC 8-400 NG
In 2020, the Group accepted the delivery of two Bombardier DHC 8-400 NG under sale and leaseback
agreements with third-party lessors. The abovementioned DHC 8-400 NG aircraft are currently
subleased to APC.
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The fleet as of December 31 follows (see Notes 15, 18 and 24):
2020 2019
Owned:
Airbus 320-200 9 5
Bombardier DHC 8-400 3 3
Bombardier DHC 8-300 4 4
Under lease:
Boeing 777-300ER 10 10
Airbus 350-900 6 6
Airbus 330-300 15 15
Airbus 321-231 24 24
Airbus 321-271N 6 6
Airbus 321-271NX 2 1
Airbus 320-200 6 13
Bombardier DHC 8-400 NG 12 10
97 97
Assets Held for Sale

In 2019, PAL’s BOD approved the sale of certain passenger aircraft and engines within 12 months.
Management determined that the fair value less costs to sell of these passenger aircraft and engines
based on offer price of prospective buyers amounted to P =1.72 billion as of December 31, 2019.
Accordingly, these were classified under “Assets held for sale” in the consolidated statements of
financial position as of December 31, 2019.
In 2020, management reassessed that the potential sale of certain aircraft previously classified as assets
held for sale is no longer probable. Accordingly, aircraft with net carrying amount of P
=1.44 billion were
reclassified back to “Property and equipment - at cost” and an impairment loss amounting to
=173.11 million was recognized as part of “Other income (charges) - net”. Other movement in assets
P
held for sale pertains to sale of spare engine amounting to =P12.40 million.
As of December 31, 2020, and 2019, assets held for sale amounted to = P115.26 million and
=1.72 billion, respectively. An impairment loss amounting to =
P72.95 million was
recognized in 2020 and 2019, respectively (nil in 2018).
Buildings and Improvements

Buildings and improvements, whose fair value can be measured reliably, are carried at appraised values
determined based on valuations performed by various qualified and Philippine SEC-accredited
independent appraisers. The appraised values as of December 31, 2020 and 2019 are based on appraisal
studies done in December 2020 and 2019, respectively. In the valuation process using market
comparison method (a market approach), the appraisers compared the fair market value of similar assets
adjusted for dissimilarities and considered the best use of the properties at hand
(Level 3). Significant unobservable valuation input in determining the fair value of buildings and
improvements includes adjusted offer prices of similar properties. Increases (decreases) in estimated
inputs would result in a significantly higher (lower) fair value.
The additional revaluation increase, net of deferred income tax effect of P

=19.94 million and
=34.99 million, recorded for the year ended December 31, 2020 and 2019 amounted to
P
P P81.62 million, respectively (see Note 19).
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If buildings and improvements were carried at cost less accumulated depreciation, the amounts as of
December 31 would be as follows:
2020 2019
Cost P
=8,810 P8,810
=
Accumulated depreciation (8,810) (8,810)
P
=– =–
P
11. Investment Properties
2020
Buildings and
Land Improvements Total
Cost
Beginning of year P
=3,474,128 P
=262,018 P
=3,736,146
Disposal (1,753,992) – (1,753,992)
Translation adjustment (179,222) (13,499) (192,721)
End of year 1,540,914 248,519 1,789,433
Accumulated depreciation and
impairment loss
Beginning of year (24,049) (199,559) (223,608)
Translation adjustment 1,238 10,310 11,538
End of year (22,811) (189,249) (212,070)
Net book value P
=1,518,103 P
=59,270 P
=1,577,373
2019
Buildings and
Land Improvements Total
Cost
Beginning of year =3,607,568
P =257,462
P =3,865,030
P
Reclassifications – 14,080 14,080
Translation adjustment (133,440) (9,524) (142,964)
End of year 3,474,128 262,018 3,736,146
Accumulated depreciation and
impairment loss
Beginning of year – (41,780) (41,780)
Impairment loss during the year (24,049) (159,315) (183,364)
Translation adjustment – 1,536 1,536
End of year (24,049) (199,559) (223,608)
Net book value =3,450,079
P =62,459
P =3,512,538
P
The Group sold an investment property with a net carrying amount of = P1.75 billion for P =3.10 billion,
resulting to recognition of gain amounting to P
=1.65 billion which is presented as part of “Other income
(charges) - net”. As of December 31, 2020, =P253.18 million of the selling price is still outstanding.
In 2019, building improvements amounting to P

=14.08 million capitalized as property and equipment
was reclassified to investment property.
In 2019, the Group recognized an impairment loss on certain land and buildings and improvements
amounting to =
P183.36 million.
The aggregate fair value of investment properties amounted to = P2.63 billion and P=8.08 billion as of
December 31, 2020 and 2019, respectively. The fair value of investment properties with carrying value
of P
=1.58 billion and P
=3.51 billion as of December 31, 2020 and 2019, respectively, has been determined
106 *SGVFS162312*
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based on valuation reports by various qualified, independent and Philippine SEC-accredited appraisers
dated December 2020 and 2019, respectively. The valuation undertaken considered the fair market
value of similar or substitute properties and related market data and established estimated value by
processes involving comparison (Level 3).
The valuation techniques used and key inputs to valuation on investment properties are as follows:
Valuation technique Significant unobservable input

Land Sales comparison approach Adjusted sales price of comparable
and income approach properties, rental rates
Buildings and Sales comparison approach Adjusted sales price of comparable
improvements properties
Significant increases (decreases) in estimated inputs above would result in a significantly higher (lower)
fair value of the properties.
These properties were held by the Group for capital appreciation, which also represents their current
use. The appraisers determined that the highest and best use of these properties is for residential,
agricultural and commercial utility. For strategic reasons, the properties are not currently used in this
manner.
The Group has no restrictions on the realizability of its investment properties and no contractual
obligations to either purchase, construct or develop investment properties or for repairs, maintenance
and enhancements.
Direct costs related to these investment properties (e.g., property taxes, among others) amounted to
=11.85 million, P
P =11.60 million and P
=18.94 million for the years ended December 31, 2020, 2019 and
2018, respectively.
12. Other Noncurrent Assets
2020 2019
Long-term security deposits (Notes 5, 15 and 18) P
=12,998,848 =14,246,730
P
Creditable withholding taxes 2,871,723 2,676,067
Deposits on aircraft leases (Notes 18, 24, 26 and 27) 1,739,539 1,687,492
Financial assets at FVTOCI (Note 27) 997,206 1,955,453
Manufacturers’ credits (Note 24) 27,419 595,556
Derivative assets (Notes 26 and 27) – 2,842,928
Others 32,307 292
P
=18,667,042 =24,004,518
P
Long-term Security Deposits

Long-term security deposits include the following, among others:
Cash amounting to P =45.14 million and P =44.64 million as of December 31, 2020 and 2019,
respectively, set aside to collateralize various surety bonds issued (as required under the legal
proceedings) in connection with certain litigations (see Note 5).
Standby letters of credit amounting to =
P1.67 billion and =
P2.38 billion as of December 31, 2020 and
2019, respectively.
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Security deposits required under certain lease agreements to cover qualifying maintenance events,
which amounted to P =3.13 billion and =
P5.20 billion as of December 31, 2020 and 2019, respectively.
Hold-out deposits for bank merchant services amounting to P =1.97 billion and =
P2.51 billion as of
December 31, 2020 and 2019, respectively.
Sinking fund amounting to = P983.80 million and = P1.35 billion as of December 31, 2020 and 2019,
respectively, set aside to guarantee the periodic payments of asset-backed securities
(see Note 15).
Total interest income earned on long-term security deposits amounted to P

=77.03 million in 2020,
=75.42 million in 2019 and =
P P79.61 million in 2018.
Deposits on Aircraft Leases

The Group’s deposits on aircraft leases are carried at amortized cost. Accretion on these deposits,
included under “Other income (charges) - net” in the consolidated statements of comprehensive income,
amounted to =
P746.51 million in 2020, =
P184.02 million in 2019 and = P174.39 million in 2018.
Financial assets at FVTOCI

The Group’s financial assets at FVTOCI include investments in MacroAsia Corporation (MAC)
amounting to P=0.93 billion and P
=1.89 billion as of December 31, 2020 and 2019, respectively. This
account also includes certain quoted equity investments and club shares amounting to P
=5.76 million
and P
=6.19 million, and unquoted equity investments amounting to =P57.94 million and =
P61.66 million
as of December 31, 2020 and 2019, respectively.
The fair value of quoted equity investments and club shares is determined by reference to quoted market
prices as of the end of each reporting period.
The movements in “Net changes in fair values of financial assets at FVTOCI”, net of deferred income
tax effect are as follows:
2020 2019 2018

=1,714,411 =1,771,548
P =1,836,988
P
Mark-to-market loss recognized as OCI (953,025) (57,137) (65,440)
761,386 1,714,411 1,771,548
Less share of non-controlling interests (30) (30) (30)
=761,356 =1,714,381
P =1,771,518
P
The fair values of investment in share of stock of MAC were determined based on published prices in
the active market while other quoted equity investments were determined by reference to quoted market
prices as of the end of each reporting period. As of December 31, 2020 and 2019, the unquoted equity
investments are carried at fair value, which is based on significant unobservable inputs (see Note 27).
Dividend income from investment in shares of stock of MAC amounting to nil in 2020 and 2018, and
=22.88 million in 2019 are included as part of “Other revenue” in the consolidated statements of
P
comprehensive income (see Note 18).
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13. Notes Payable
Notes payable as of December 31, 2020 and 2019 consist of unsecured short-term loans from local
banks totaling to =
P11.38 billion and =
P18.53 billion, respectively.
Interest rates on these notes payable range from 4.00% to 5.50% in 2020, from 4.00% to 5.59% in 2019
and from 3.25% to 5.15% in 2018. Interests incurred on these loans for the year ended December 31,
2018 amounting to = P45.01 million were capitalized as part of property and equipment based on 4.75%
capitalization rate (see Note 10). The related interest expense charged to profit or loss amounted to
=596.37 million in 2020, P
P =862.68 million in 2019 and =
P684.54 million in 2018. Interest payable relating
to short-term notes payable amounting to = P61.95 million and = P48.46 million as of December 31, 2020
and 2019, respectively, are included in “Accrued expenses - others” (see Note 14).
14. Accrued Expenses and Other Current Liabilities
2020 2019
Accrued expenses:
Maintenance (Note 18) P
=13,792,423 =13,313,895
P
Lease charges (Note 15) 11,904,691 108,057
Salaries and wages 2,669,728 897,116
Ground handling charges (Note 18) 1,006,284 1,549,789
Landing and take-off fees 814,923 1,459,136
Passenger food and supplies 238,320 614,434
Foreign station 252,939 432,064
Income taxes 221,341 368,803
Others (Note 13) 781,062 1,843,446
Derivative liabilities (Notes 26 and 27) 4,364,590 2,175,604
Premium payable 1,993,915 265,682
P
=38,040,216 =23,028,026
P
Other accrued expenses include accruals for interest expense and other operating expenses.
In order to hedge against adverse market condition, PAL purchased put options in which unpaid
amounts are included as part of “Premium payable”.
Lease charges is composed of the unpaid portion of the lease liabilities that are due as of December 31,
2020 and 2019 (see Note 15).
15. Long-term Obligations
2020 2019
Lease liabilities (Note 24) P
=152,031,907 =174,602,512
P
Long-term debt (Note 18) 32,570,881 34,810,874
184,602,788 209,413,386
Less current portion 119,900,330 29,712,836
P
=64,702,458 =179,700,550
P
Note 26 presents the undiscounted contractual maturity analysis of financial liabilities, including
long-term obligations. Note 23 presents the movement of the lease liabilities for the years ended
December 31, 2020 and 2019.
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Lease Liabilities
Aircraft and engine leases
The present value of minimum lease commitments for the Group’s lease liabilities as of
December 31, 2020 and 2019 follows:
2020 2019
Minimum Present Minimum Present
lease value of lease lease value of lease
commitments commitments* commitments commitments*
Due within one year =103,804,932
P =94,725,512
P =31,703,238
P =23,838,511
P
Due after one year but within
five years 70,673,432 54,822,724 109,681,615 89,681,356
More than five years – – 64,992,593 58,196,928
Minimum lease payments 174,478,364 149,548,236 206,377,446 171,716,795
Interest and others (24,930,128) – (34,660,651) –
149,548,236 149,548,236 171,716,795 171,716,795
Less current portion 93,962,272 93,962,272 23,838,511 23,838,511
=55,585,964
P =55,585,964
P =147,878,284
P =147,878,284
P
*
Include obligations under lease with bargain purchase option amounting to =
P 46.5 million as of December 31, 2020 and =
P 52.2 million as of
December 31, 2019.
Details of the aircraft and engine leases are presented in Note 24.
The carrying value of the aircraft and engine leases recognized in the consolidated statements of
financial position amounted to =
P213.93 billion as of December 31, 2020 and 2019,
respectively (see Note 10).
As discussed in Note 2, the Group has not made principal and/or interest payments due in respect of
the above lease liabilities since April 2020, resulting in breach of covenants under the lease agreements.
Hence, the noncurrent portion of the lease liabilities amounting to = P17.42 billion that are deemed due
and demandable are classified and presented as current liabilities as of December 31, 2020. Further, the
unpaid portion of the lease liabilities that are due as of December 31, 2020 and 2019 amounting to
P P108.06 million, respectively, is presented under “Accrued Expenses and other
liabilities (see Note 14).
Ground property
The present value of minimum lease commitments for the Group’s ground property leases as of
December 31 follows:
2020 2019
Minimum Present Minimum Present
lease value of lease lease value of lease
commitments commitments commitments commitments
Due within one year =3,382,161
P =2,436,051
P =637,124
P =455,982
P
Due after one year but within
five years 55,275 47,621 1,559,104 1,078,789
More than five years – – 1,831,856 1,350,946
Minimum lease payments =3,437,436
P 2,483,672 4,028,084 2,885,717
Interest and others (953,764) – (1,142,367) –
2,483,672 2,483,672 2,885,717 2,885,717
Less current portion 2,483,672 2,483,672 455,982 455,982
=–
P =–
P =2,429,735
P =2,429,735
P
110 *SGVFS162312*
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The Group has various ground property lease agreements in which the related right-of-use assets’
carrying value amounted to =P2.3 billion and P
=2.80 billion as of December 31, 2020 and 2019,
respectively (see Note 10).
Interests paid on these leases are based on 6.75% rate as of December 31, 2020 and 2019. Principal
payments amounted to = P606.00 million and =P323.16 million in 2020 and 2019, respectively.
Long-term Debt
2020 2019
Secured loans, net of debt issuance costs (Note 18) P
=32,570,879 =34,810,874
P
Less current portion 23,454,387 5,418,343
P
=9,116,492 =29,392,531
P
Secured Loans
$325 million, $260 million and $100 million asset-backed securities
In August 2015, PAL obtained = P15.31 billion ($325 million) asset-backed security from a foreign bank
for additional working capital. The security is secured by current and future collections from passenger
sales made in the United States through designated credit card companies. The security is repaid
through monthly installment for 60 months subject to interest of one-month LIBOR plus margin.
In September 2017, PAL obtained additional P

=12.98 billion ($260 million) from the same foreign bank
and entered into an amendment agreement to extend the term up to 48 months from the original
maturity.
In December 2019, PAL obtained additional = P5.06 billion ($100 million) from the same foreign bank
and entered into an amendment agreement to extend the term up by an additional 18 months, effectively
extending the maturity of the loan to February 2026.
As of December 31, 2020 and 2019, outstanding balance of these securities amounted to
P P20.34 billion, with current portion amounting to P
P3.29 billion,
respectively. Total financing charges related to these securities amounted to =
P612.49 million in 2020,
The debt issuance costs incurred amounting to = P18.95 million in 2020, P =49.93 million in 2019 and
=88.91 million in 2018 were included in the amortization of the security. The unamortized debt issuance
P
costs amounted to =P59.32 million and =
P85.86 million as of December 31, 2020 and 2019, respectively.
The outstanding pledged receivables amounted to nil and P =9.87 million as of December 31, 2020 and
2019, respectively (see Note 6). The receivables collected through the credit card companies will be
applied against the monthly installment due. As discussed in Note 12, a sinking fund amounting to
P =1.12 billion as of December 31, 2020 and 2019, respectively, were set aside to
guarantee these securities. These securities are subject to certain covenants which include, among
others, maintenance of a coverage ratio. PAL failed to make principal payments starting April 2020,
which is considered as an event of default, and breached the minimum coverage ratio, making the loan
due and demandable as of December 31, 2020. Accordingly, the noncurrent portion of the outstanding
balance of the loan amounting to =P13.13 billion was classified and presented as current portion of long-
term obligations in the consolidated statement of financial position as of December 31, 2020.
111 *SGVFS162312*
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$200 million, $150 million and $100 million asset-backed securities

In June 2015, PAL obtained a P =9.42 billion ($200 million) asset-backed security from a counterparty
bank. The security is secured by current and future passenger and cargo receivables which are sold in
Japanese Yen through identified agents in Japan. The security is repaid through monthly installment
for 60 months subject to interest of one-month LIBOR plus margin.
In March 2018, PAL obtained an additional =P7.89 billion ($150 million) asset-backed security from the
same counterparty bank and entered into an agreement to extend the term up to 48 months from original
maturity.
In August 2019, PAL obtained additional = P5.06 billion ($100 million) asset-backed security from the
same counterparty bank and entered into an amendment agreement to extend the term up by an
additional 30 months, effectively extending the maturity of the loan to August 2026.
As of December 31, 2020 and 2019, outstanding balance of this asset-backed security amounted to
P P13.66 billion, with current portion amounting to =
P3.36 billion and =
P2.03 billion,
respectively. Total financing charges related to this security amounted to =
P467.05 million in 2020,
The debt issuance costs incurred amounting to = P8.33 million in 2020, = P6.89 million in 2019 and
=10.15 million in 2018 were included in the amortization of the security. The unamortized debt issuance
P
costs amounted to =P7.88 million and =
P12.81 million as of December 31, 2020 and 2019, respectively.
As of December 31, 2020 and 2019, the outstanding pledged receivables amounted to nil and
=379.81 million, respectively (see Note 6). The receivables collected through the identified agents in
P
Japan will be applied against the monthly installment due. As discussed in Note 12, a sinking fund
amounting to = P390.96 million and = P230.49 million was set aside to guarantee this security as of
December 31, 2020 and 2019, respectively. This security is subject to certain covenants which include
maintenance of a coverage ratio. As of December 31, 2020, PAL is compliant with the required
coverage ratio. On April 30, 2020, PAL executed a request for waiver until September 30, 2020. On
October 28, 2020, PAL executed a letter to extend the maturity of unpaid principal and interest until
December 31, 2020. On December 29, 2020, PAL executed a letter, which has been confirmed and
agreed by the lender, to further extend the maturity of the unpaid principal and interest due in 2020 to
March 31, 2021.
$16.5 million term loan from a local bank

In March 2020, PAL obtained P =839.19 million ($16.5 million) asset-backed security from a local bank.
The loan requires quarterly payments of interest based on three-month LIBOR plus margin. The loan
is secured by an aircraft with carrying value of P=769.91 million as of December 31, 2020. As of
December 31, 2020, the outstanding balance of the loan amounted to = P788.54 million.
The interests and debt issuance costs incurred on this loan amounting to P =19.84 million and
=2.23 million, respectively, in 2020 were included under “Financing charges” in the consolidated
P
statements of comprehensive income. The unamortized debt issuance costs amounted to
=3.84 million as of December 31, 2020. In 2020, PAL was not able to make principal and/or interest
P
payments, however, on September 30, 2020, PAL and local bank signed a supplemental agreement for
a retroactive grace period for principal repayment of one year beginning June 6, 2020 until
June 6, 2021.
112 *SGVFS162312*
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In 2019, MMET obtained a facility for = P813.30 million ($15.35 million) from a bank to finance
payments related to acquisition of vessels. The loan requires quarterly principal payments starting
January 2020 until 2026 with 5% annual interest. The loan is secured by the two vessels of MMET. In
2020, MMET was not able to make principal and/or interest payments, however, on October 23, 2020,
MMET and local bank signed a supplemental agreement for a retroactive grace period for principal
repayment with due dates between April 2020 until July 2021. Principal repayment will resume in
October 2021.
The outstanding balance of the loan amounted to =

P772.74 million including current portion amounting
to =
P32.18 million as of December 31, 2020 and P=813.30 million including current portion amounting
=101.73 million as of December 31, 2019.
P

In December 2016, PAL obtained a facility for = P6.33 billion from a local bank to finance predelivery
payments related to the acquisition of four Airbus 350-900 aircraft due for delivery in 2018 and 2019.
PAL availed half of the loan amounting to =P3.16 billion in the same month with the remaining balance
availed in 2017. The loan requires quarterly payments of interest based on three-month LIBOR plus
margin. PAL accepted the delivery of two of the related aircraft and made principal payments
amounting to =
P3.22 billion and =P3.34 billion in 2019 and 2018, respectively.
The loan is secured by aircraft and spare engine with aggregate carrying value of =
P2.24 billion as of
December 31, 2018. Interests incurred on this loan amounting to P =255.22 million in 2018 were
capitalized as part of property and equipment (see Note 10) while interest amounting to
P P83.90 million in 2018 were included under “Financing charges” in the
consolidated statements of comprehensive income.
The loan is subject to certain covenants which include, among others, maintenance of an interest
coverage and Net Debt to Earnings before interest, taxes, depreciation and amortization (EBITDA)
ratio. The outstanding balance of the loan amounting to =
P3.22 billion as of December 31, 2018 was
settled by PAL in 2019.
$71.74 million term loan from a foreign bank

In June 2017, PAL obtained a facility for P =3.58 billion ($71.74 million) from a foreign bank to finance
predelivery payments related to the acquisition of two Airbus 350-900 due for delivery in 2018. The
loan requires quarterly payments of interest based on three-month LIBOR plus margin. PAL accepted
the delivery of the related aircraft and paid the outstanding balance in 2018.
Interests and debt issuance costs incurred on this loan amounting to P

=86.68 million in 2018 were
capitalized as part of property and equipment (see Note 10) while interest amounting to
=76.44 million in 2018 were included under “Financing charges” in the consolidated statements of
P
comprehensive income.
113 *SGVFS162312*
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16. Reserves and Other Noncurrent Liabilities
2020 2019
Due to a stockholder (Notes 17 and 18) P
=17,205,998 =–
P
Deposit from non-controlling interest of a subsidiary
(Notes 17 and 18) – 11,411,253
Deferred revenue under frequent flyer program
(Note 4) 3,610,705 3,419,834
Provisions 76,665 97,746
Derivative liabilities (Notes 26 and 27) – 3,041,541
Other noncurrent liabilities (Note 18) 46,044 126,193
P
=20,939,412 =18,096,567
P
Due to a Stockholder and Deposit from Non-controlling Interest of a Subsidiary

In 2019, PAL received deposits amounting to = P11.41 billion from BSHI which was initially planned to
be used for subscription of capital stock of PAL and was presented as “Deposit from non-controlling
interest of a subsidiary” under noncurrent liabilities in the consolidated statement of financial position
as of December 31, 2019 (see Note 17). In 2020, additional cash amounting to P =6.38 billion was
received by PAL. On October 26, 2020, BOD approved the withdrawal the application for the increase
in authorized capital stock with the Philippine SEC. Accordingly, the entire balance of = P17.21 billion
was reclassified as “Due to a stockholder” under “Reserves and Other Noncurrent Liabilities” in the
consolidated statement of financial position as of December 31, 2020.
Provisions
Provisions consist substantially of probable claims and other litigations involving the Group.
The timing of the cash outflows of these provisions is uncertain as it depends upon the outcome of the
Group’s negotiations and/or legal proceedings, which are currently ongoing with the parties involved.
2020 2019
=97,746 =130,327
P
Additions – 5,902
Reversal – (37,796)
Settlement (20,890) –
Translation adjustment (191) (687)
=76,665 =97,746
P
Disclosure of additional details beyond the present disclosures may seriously prejudice the Group’s
position. Thus, as allowed by PAS 37, only general descriptions were provided.
ARO
In 2018, PAL reversed the provision for ARO amounting to P =1.31 billion as the existing MRF has been
assessed to be sufficient to cover the restoration cost upon redelivery of the related aircraft to the lessors.
The reversal of ARO in 2018 is presented as part of “Other income (charges) - net” in the consolidated
statements of comprehensive income.
114 *SGVFS162312*
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17. Equity
The Parent Company’s capital stock consists of:
No. of Shares Amount

2020 2019 2020 2019
Authorized (P
=1 par value) 13,500,000,000 13,500,000,000 =13,500,000
P =13,500,000
P
Issued and subscribed 11,611,003,257 11,611,003,257 =9,799,753

P =9,799,753
P
Treasury stock (25,015) (25,015) (25) (25)
11,610,978,242 11,610,978,242 =9,799,728
P =9,799,728
P
a. Issued and outstanding shares are held by 6,453 and 6,456 equity holders as of December 31, 2020
and 2019, respectively.
b. The Parent Company has 25,015 treasury shares amounting to P =25.00 as of December 31, 2020
and 2019. Future earnings are restricted from dividend declaration to the extent of the cost of these
treasury shares.
c. The Parent Company’s track record of registration of securities under the Securities Regulation
Code is as follows:
Date of approval Number of Shares Licensed Issue/Offer Price

August 2, 1930 18,000 =100.00
P
August 2, 1930 2,000,000 0.10
January 6, 1951 7,000,500 0.10
December 4, 1957 30,000,000 0.10
March 25, 1970 200,000,000 0.10
April 14, 1975 5,000,000,000 0.01
March 7, 1977 12,500,000,000 0.01
In 1996, the Philippine SEC approved the decrease in authorized capital stock from 20 billion
shares to 200 million shares while the par value was increased from =P0.01 per share to =
P1.00 per
share. In 2000, the Philippine SEC approved the increase in the authorized capital stock from
200 million shares to 400 million shares with =P1.00 par value per share. The authorized capital
stock was again increased from 400 million shares to 20 billion shares in 2007.
The Parent Company’s BOD and stockholders approved the increase in the Parent Company’s
authorized capital stock from =
P20.00 billion divided into 20.00 billion shares at =
P1.00 par value per
share to =
P23.00 billion divided into 23.00 billion shares at P
=1.00 par value per share in separate
meetings held on June 26, 2012 and September 28, 2012, respectively. Out of the increase in the
authorized capital stock, =
P2.42 billion have been subscribed and fully paid by way of cash infusion
by Trustmark. The increase in authorized capital stock and the amended Articles of Incorporation
were approved by the Philippine SEC on December 12, 2012. The Parent Company incurred filing
fees of P
=6.09 million and Documentary Stamp Tax (DST) of = P85.00 million on the issuance of
shares, which were recognized as a reduction from additional paid-in capital.
d. In fiscal year 2013, Trustmark subscribed to 17.00 billion shares at =

P1.00 per share amounting to
=17.00 billion, of which 14.58 billion shares were issued out of the unissued capital stock of the
P
Parent Company, and the balance of 2.42 billion shares were issued out of the increase in the
authorized capital stock.
115 *SGVFS162312*
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e. On February 4 and March 15, 2013, the BOD and the stockholders approved the increase in the
Parent Company’s authorized capital stock from P =23.00 billion divided into 23.00 billion shares at
=1.00 par value per share to =
P P30.00 billion divided into 30.00 billion shares at P
=1.00 par value per
share and the amendment of its Articles of Incorporation to reflect the aforementioned increase.
The Parent Company’s application for the increase in authorized capital stock was approved by the
Philippine SEC on June 28, 2013. Out of the increase in capital stock, 2.42 billion shares were
subscribed, of which, 603.75 million shares have been fully paid for. The Parent Company incurred
filing fees of P
=14.14 million and DST of = P12.08 million on the issuance of shares, which were
recognized as a reduction from additional paid-in capital.
f. On September 26, 2016, the Parent Company’s BOD approved and authorized the acquisition, in a
share swap transaction, of PAL shares from existing PAL shareholders. Relative thereto the BOD
likewise approved the share swap ratio of 5:1 or equivalent to five PAL shares to one PHI share.
On December 27, 2018 and December 27, 2017, the Philippine SEC approved the acquisition
of 0.01% and 0.64% non-controlling interest in PAL, respectively. The Parent Company issued
0.75 million and 123.54 million new shares from its authorized but unissued capital stock in
favor of PAL shareholders who have participated in the PAL share swap transaction. As of
December 31, 2020 and 2019, the Parent Company has effective ownership interest in PAL of
98.92%.
The Parent Company incurred filing fees of P

=1.25 million and DST of =
P1.06 million on the issuance
of shares, which were recognized as a reduction from additional paid-in capital.
g. On November 28, 2016, the Parent Company’s BOD also approved the acquisition, through share
swap transaction, of the shares of ZUMA from its existing shareholders with a share swap exchange
ratio of 19:1 corresponding to 19 PHI shares to one ZUMA share. On December 21, 2017, the
Philippine SEC approved the acquisition of ZUMA through share swap transaction from its existing
shareholders. The Parent Company issued 840.46 million new shares from its authorized but
unissued capital stock valued at P =5.00 per share in favor of Cosmic Holdings Corporation.
Accordingly, as of December 31, 2019 and 2018, the Parent Company owns 51% of ZUMA.
The Parent Company also incurred filing fees of =P8.49 million and DST of P =4.37 million on the
issuance of shares, which were recognized as a reduction from additional paid-in capital in 2017.
h. On March 28 and May 25, 2017, the BOD, by majority vote and by the vote of the stockholders
owning or representing at least 2/3 of the outstanding capital stock of the Parent Company,
approved the decrease in authorized capital stock by changing the par value of the shares from
=1.00 to P
P =0.45 per share. Simultaneously, the BOD approved to increase the par value per share
from P=0.45 to = P1.00 per share, without increasing the authorized capital, thus decreasing the
number of shares corresponding to the authorized and subscribed capital stock. The decrease in the
authorized capital by reducing the par value per share to P =0.45 per share and the subsequent
increase in the par value to P
=1.00 per share by reducing the number of shares corresponding to the
authorized capital stock were approved by the Philippine SEC on December 22, 2017. Accordingly,
authorized capital stock as of December 31, 2019 and 2018 is composed of 13.50 billion shares,
with 10.52 billion shares issued and outstanding and 1.09 billion shares subscribed.
i. On August 23, 2018, the SEC approved the Parent Company’s equity restructuring to partially wipe
out the Parent Company’s deficit amounting to P
=29.34 billion as of December 31, 2017 against the
APIC of =P25.34 billion.
116 *SGVFS162312*
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j. On March 25 and May 30, 2019, the BOD, by majority vote of the Board of Directors, and the
stockholders, owning or representing at least 2/3 of the outstanding capital stock of the Parent
Company, respectively, approved the increase in authorized capital stock from 13.50 billion
common shares with par value of =P1.00 per share to 20.00 billion common shares with par value
of P
=1.00 per share.
k. On October 4, 2019, PAL’s BOD approved the amendment of PAL’s Articles of Incorporation to
increase the authorized capital stock from 13.0 billion shares with par value of =
P1.00 per share to
30.0 billion shares with par value of = P1.00 per share. Relative to the said proposed increase in
capital, PAL received deposits totaling P=11.41 billion from BSHI.
As of December 31, 2019, the cash received from BSHI to be used for subscription of capital stock
of PAL was presented as “Deposit from non-controlling interest of a subsidiary” under noncurrent
liabilities.
On February 18, 2020, the stockholders of PAL approved to increase the authorized capital stock
from 13.0 billion shares at P
=1.00 par value per share to 30.0 billion shares with =
P1.00 par value per
share.
On October 26, 2020, the BOD of PAL approved the withdrawal of the Parent Company’s
application for the increase in authorized capital stock with the Philippine SEC in light of the
ongoing rehabilitation plan as discussed in Note 2. Accordingly, the entire balance of the cash
received from BSHI amounting to P =17.21 billion was classified as “Due to a stockholder” under
“Reserves and Other Noncurrent Liabilities” in the consolidated statement of financial position as
of December 31, 2020 (see Note 16).
18. Related Party Transactions
Related party relationship exists when one party has the ability to control, directly or indirectly, through
one or more intermediaries, or exercise significant influence over the other party in making financial and
operating decisions. Such relationships also exist between and/or among entities which are under common
control with the reporting entity and its key management personnel, directors or stockholders. Key
management personnel, including directors and officers of the Parent Company and close members of the
family of these individuals, and companies associated with these individuals also constitute related
parties. In considering each possible related party relationship, attention is directed to the substance of the
relationship and not merely the legal form.
117 *SGVFS162312*
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The following tables present the amounts and outstanding balances of the Group’s transactions with its
related parties which are not eliminated:
2020
Outstanding
Receivable
Transactions Volume (Payable) Terms and Conditions
Ultimate and immediate parent entities
Non-interest bearing;
Due to a stockholder (Note 16) P
=5,794,745 (P
= 17,205,998) unsecured; unimpaired
Receivables (Note 6) – 318,000 unsecured; unimpaired
Entities under common control
Cash and money placements, including
interest income (Notes 5 and 12) 10,050 3,784,662 Partly secured; unimpaired
Non-interest bearing; unsecured;
Receivables (Note 6) (259,265) 8,487,548 unimpaired
Accounts payable 188,565 (527,098) unimpaired
Notes payable (Note 13)
Principal 496,239 (3,697,771) Bears interest based on prevailing market
Financing charges 204,406 (5,084) rates; secured; payable in 180 days
Short term investment, including interest 1,400 24,949 Interest bearing; unimpaired
income
Sales and other income (Note 6) 6,308 53,378 Receivable in 30 days; unimpaired
Groundhandling and other charges
(Notes 14 and 20) 493,546 (540,676) Payable after 30 days
Entities under significant shareholder group
Sales and other income (Note 6) 129,711 484,519 Receivable in 30 days
Aircraft maintenance and other charges
(Notes 14 and 20) 5,863,603 (4,260,542) Payable after 15 to 30 Days
2019
Outstanding
Receivable
Ultimate and immediate parent entities
Due to a stockholder (Note 16) =11,411,253 (P
P =11,411,253) unsecured; unimpaired
Receivables (Note 6) – 318,000 unsecured; unimpaired
Cash and money placements, including
interest income (Notes 5 and 12) 4,394 8,990,149 Partly secured; unimpaired
Dividend Income 22.88 – Non-interest bearing; unsecured;
unimpaired
Receivables (Note 6) – 8,746,813 unimpaired
Accounts payable 476,707 (563,013) Non-interest bearing; unsecured;
Notes payable (Note 13) unimpaired
Principal 1,398,319 (4,405,245) Bears interest based on prevailing
market rates; secured; payable in 180
days
Financing charges 143,297 (6,352) Interest bearing; unimpaired
Short term investment, including interest (3,152) 170,961 Interest bearing; unimpaired
income
Groundhandling and other charges
(Notes 14 and 20) 2,687,651 (754,337) Payable after 30 days
Sales and other income (Note 6) (245,160) 446,682 Receivable in 30 days
118 *SGVFS162312*
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2018
Outstanding
Receivable
Immediate parent
Receivables (Note 6) =318,000
P =318,000
P unimpaired
Cash and money placements, including 58,946 5,920,100 Partly secured; unimpaired
interest income (Notes 5 and 12)
Receivables (Note 6) – 9,080,566 Non-interest bearing; unsecured;
unimpaired
Accounts payable 1,780,411 (1,780,411) Non-interest bearing; unsecured;
unimpaired
Notes payable (Note 13)
Principal 962,214 3,154,800 Bears interest based on prevailing
Financing charges 121,095 (1,864) market rates; secured; payable in
180 days
Short term investment, including interest 4,793 198,413 Interest bearing; unimpaired
income
Groundhandling and other charges 2,304,150 553,057 Payable after 30 days
(Notes 14 and 20)
Sales and other income (Note 6) 8,622 182,272 Receivable in 30 days
Terms and Conditions of Transactions with Related Parties

Outstanding balances of accounts with related parties at year-end are unsecured, payable on demand
and are settled in cash or are applied against any outstanding advances to or from the related party,
unless otherwise stated. For the years ended December 31, 2020 and 2019, the Group did not make
any provision for ECL relating to amounts owed by related parties. This assessment is undertaken each
financial year by referring to the financial position of the related party and the market in which the
related party operates.
a. The Parent Company owns 114.4 million common shares (7.07% ownership interest) of MAC in
2018 and 2019 and 137.3 million common shares (7.10% ownership interest) in 2020. The increase
in number of shares is a result of the 20% stock dividend declared by MAC in August 2020. Certain
members of the Parent Company’s BOD are also officers and members of the BOD of MAC.
Dividends receivable from this investment amounted to nil in 2020 and 2018 and
=22.88 million in 2019 (see Note 6).
P
b. As of December 31, 2020 and 2019, cash and cash equivalents and security deposits (included
under “Cash and cash equivalents” and “Other noncurrent assets” in the consolidated statements of
financial position) with banks under common control amounted to P =3.78 billion and =
P8.99 billion,
respectively (see Notes 5 and 12). The related interest income on these investments and cash
deposits amounted to P =10.05 million in 2020, P
P58.94 million in 2018.
These cash and cash equivalents with entities under common control include money placements
for standby letters of credit amounting to =
P220.76 million and =
P236.84 million as of December 31,
2020 and 2019, respectively (see Note 12).
The retirement plan assets of PAL are managed by a bank under common control (see Note 21).
119 *SGVFS162312*
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c. As of December 31, 2020 and 2019, PAL has outstanding short-term notes payable amounting to
=3.70 billion and =
P P4.41 billion, respectively, which bear interest based on prevailing market rates,
with a bank under common control (see Note 13). The related financing charges on these short-
term notes payable amounted to P =204.31 million in 2020, P =143.30 million in 2019 and
=121.07 million in 2018.
P
d. In September 2015, PAL entered into a five-year General Terms and Agreement for Maintenance,
Repair and Overhaul Services (GTA) with Lufthansa Technik Philippines (LTP) covering line
maintenance, component maintenance, C-check, D-check and other support services. The GTA will
automatically renew unless terminated by either party.
In August 2020, PAL entered into a contractual arrangement for the commercial terms specifically
for the Line Maintenance and Support Services of LTP covering the months of September and
October 2020. All other terms and supplement agreements remain in full force and in effect.
Subsequently, in October 2020, LTP issued an amended contractual agreement for the extension of
the Line maintenance and Support Services from November 1, 2020 to December 31, 2020 or until
the one-year Line Maintenance contract is finalized and agreed.
In February 2009, PAL and LTP also entered into an Engine Maintenance Services (EMS) for
CFM56-5B Engines agreement for a period of 12 years. LTP has the option to extend the agreement
for another two years by giving six-month prior notice. As of May 26, 2021, management is
evaluating whether to extend or enter into a new contract with LTP.
Total LTP-related maintenance and repair costs charged to operations amounted to = P3.75 billion in
2020, P
=8.79 billion in 2019 and = P9.22 billion in 2018. In addition, related expendable parts sold
to LTP amounted to = P11.6 million in 2020, P =3.22 million in 2019, P=7.95 million in 2018. As of
December 31, 2020 and 2019, PAL has outstanding amounts payable to and estimated unbilled
charges from LTP totaling =P3.68 billion and P =1.93 billion (included under “Accounts payable” in
the consolidated statements of financial position), net of revolving fund and unapplied credits from
and advance payments to LTP amounting to = P270.75 million and = P239.10 million, respectively.
PAL, in the normal course of its business, renders various services to LTP. Revenues earned from
these services are included under “Other income (charges) - net” in the consolidated statements of
comprehensive income. Receivables from LTP amounted to = P52.44 million and =
P94.66 million as
e. PAL has a ground handling and catering agreement with MacroAsia Airport Services Corporation
(MASC) and MacroAsia SATS Inflight Services Corporation (MSISC), entities under common
shareholder group. On October 1, 2011, the parties executed a supplement to the agreement
specifying the locations, agreed services and charges with MASC. On March 16, 2019, PAL
executed a service catering agreement with MSISC.
Related ground handling expenses amounted to P =966.30 million in 2020, P

=1.49 billion in 2019 and
=616.02 million in 2018. Outstanding payable to MASC amounting to P
P =398.06 million and
=101.57 million as of December 31, 2020 and 2019, respectively, is included under “Accounts
P
payable” in the consolidated statements of financial position.
Catering expenses related to MSISC amounted to P =542.00 million and P

=789.15 million in 2020 and
2019, respectively. Outstanding payable to MSISC amounting to = P270.47 million and
=112.51 million as of December 31, 2020 and 2019, respectively, is included under “Accounts
P
payable” in the consolidated statements of financial position.
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f. APC has a ground handling agreement with MASC to provide ramp, passenger and cargo handling,
and other ground services to APC. Related ground handling charges amounted to
=456.82 million in 2020, P
P =456.82 million in 2019 and =P493.53 million in 2018. Outstanding
payable to MASC amounting to = P213.16 million and P
=175.19 million as of December 31, 2020 and
2019, respectively, is included under “Accounts payable” in the consolidated statements of
financial position.
g. The compensation of key management personnel of the Group consisted of short-term employee
benefits amounting to =
P69.31 million, P
P48.20 million and retirement benefits
amounting to P=11.40 million, = P9.14 million and = P5.92 million in 2020, 2019 and 2018,
respectively.
The following are the balances among related parties which are eliminated in the consolidated financial
statements:
Assets Liabilities
Recognized Recognized Years Ended December 31
by: by: Terms 2020 2019 2018
PAL PHI Noninterest-bearing, unsecured,
not impaired P
=3,600,000 =3,600,000
P =3,600,000
P
APC PAL Non-interest bearing,
unsecured, not impaired 5,583,184 925,295 2,557,494
APC PAL Noninterest-bearing, due and
refundable at the end of the
lease term, not impaired 7,058 8,045 12,185
Noninterest-bearing, due and
refundable at the end of the
lease term, not impaired 319,868 329,535 337,969
PAL APC Noninterest-bearing, unsecured,
not impaired 4,063,415 9,001,879 3,264,584
APC ZUMA Noninterest-bearing, due and
demandable, not impaired 62,972 62,972 62,972
APC GUIDE Noninterest-bearing, due and
demandable, not impaired 12,708 8,578 –
GUIDE APC Noninterest-bearing, due and
demandable, not impaired 26 26 –
a. As of December 31, 2020 and 2019, PAL has various aircraft and engines lease agreements with
the subsidiaries of FSL covering Airbus 330-300, Airbus 321-231 and Boeing 777-300ER aircraft
and spare engines (see Notes 10 and 24).
b. The transactions between APC and PAL pertain mainly to joint services and code share agreements,
and maintenance services.
Effective March 2014, PAL entered into the Code Share Agreement with APC. This arrangement
superseded the existing Reciprocal Free Flow Code Share Agreement. Under the Code Share
Agreement, PAL markets the codeshare flights while APC operates the flights based on agreed
rates.
As of December 31, 2020 and 2019, PAL has outstanding lease agreements with APC covering
Airbus 321-231, Airbus 320-200 aircraft, Bombardier DHC 8-300 and Bombardier DHC 8-400
aircraft, for a period of 36 to 144 months (see Notes 10 and 24). In 2019, five additional
Airbus 320-200 were subleased to APC.
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19. Other Comprehensive Income
Movements in other comprehensive income are as follows:
2020 2019 2018

OCI to be reclassified to profit or loss in subsequent periods:
Cumulative translation adjustments:
=2,192,693 =2,066,678
P =1,931,547
P
Effect of foreign exchange translation* 1,052,752 126,015 135,131
End of year 3,245,445 2,192,693 2,066,678
Net changes in fair values of financial assets at FVTOCI (Note 12):
Balance at beginning of year, net of deferred income tax effect 1,714,411 1,771,548 1,836,988
Loss on changes in fair values for the year (953,055) (57,167) (65,470)
Deferred income tax effect on the fair value changes for the year 30 30 30
End of year 761,386 1,714,411 1,771,548
4,006,831 3,907,104 3,838,226
OCI not to be reclassified to profit or loss in subsequent periods:
Revaluation increment (Note 10):
Balance at beginning of year, net of deferred income tax effect 686,292 678,425 718,155
Revaluation increment for the year 66,457 116,615 –
Deferred income tax effect on the revaluation increment for the year (19,937) (34,985) –
Transfer of portion of revaluation increment in property
realized through depreciation, net of deferred
income tax effect and foreign exchange adjustment (105,129) (73,763) (39,730)
End of year 627,683 686,292 678,425
Accumulated remeasurement losses on defined benefit obligation
(Note 21):
Balance at beginning of year, net of deferred income tax effect (610,289) 36,456 (758,007)
Remeasurement gains (losses) for the year (83,093) (948,251) 1,109,547
Deferred income tax effect on remeasurement gains (losses) for the year 16,829 301,506 (315,084)
End of year (676,553) (610,289) 36,456
(48,870) 76,003 714,881
Total other comprehensive income at the end of the year P
=3,957,961 =3,983,107
P =4,553,107
P
Other comprehensive income attributable to:
Equity holders of the Parent Company P
=3,484,689 =3,297,566
P P3,318,560
=
Non-controlling interests 473,272 685,541 1,234,547
P
=3,957,961 =3,983,107
P =4,553,107
P
*Represent the effect of translating the US Dollar consolidated financial statements of PAL, a subsidiary, using the applicable year-end exchange rates of
=48.02, =
P P 50.635 and P =52.58 to US$1 as of December 31, 2020, 2019 and 2018, respectively, and the monthly average exchange rates for the years then
ended.
20. Expenses
The significant components of expenses by nature are as follows:
2020 2019 2018

Depreciation, amortization and obsolescence (Notes 7
and 10) P28,091,381
= P25,743,649
= P8,309,684
=
Fuel and oil (Note 27) 18,725,546 48,077,094 52,794,958
Repairs and maintenance (Notes 7 and 18) 11,990,307 20,036,964 19,717,625
Crew and staff costs (Note 21) 8,668,577 14,991,195 14,962,092
Ground handling charges (Note 18) 3,646,314 9,655,860 9,740,655
Landing and take-off fees 2,330,842 7,273,314 6,981,462
Utilities 1,335,116 2,314,019 2,195,345
Passenger food (Note 18) 1,077,981 4,347,155 4,266,613
Flight amenities 801,081 2,372,426 2,966,949
Reservation and selling costs 763,064 3,375,400 3,166,000
Aircraft lease rentals (Notes 18 and 24) 86,631 1,010,149 17,878,851
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Fuel and oil include the effect of fair value gain (loss) on various fuel derivatives used as
economic hedges of fuel cost amounting to (P
=1.84 billion) in 2020, =
P508.03 million in 2019 and
(P
=920.02 million) in 2018.
21. Accrued Employee Benefits
Characteristics of the Plans

The Group’s Retirement Plans are noncontributory defined benefit plans covering all regular
employees. Benefits are based on the employees’ years of service and final plan salary.
The Trustee is responsible for the administration of the plan assets and for the definition of the
investment strategy.
The retirement plans meet the minimum retirement benefit specified under Republic Act 7641,
The Retirement Pay Law.
The Group’s accrued employee benefits as of December 31 consisted of the following:
2020 2019
Regular retirement benefits P
=4,525,541 =5,617,838
P
Other long-term benefits:
Sick leave and vacation leave 683,790 1,161,896
Others 6,416,786 5,760,472
P
=11,626,117 =12,540,206
P
“Others” includes benefits from pilot loyalty program, pilot occupational disability program, pilots’
retirement plan and retirement benefits for foreign stations’ employees.
The components of retirement costs (income) included under “Expenses” in the consolidated statements
of comprehensive income are as follows:
Regular retirement benefits Sick leave and vacation leave benefits

2020 2019 2018 2020 2019 2018
Current service cost =459,430 P
P =363,545, =410,053
P =45,406
P =271,409
P =148,173
P
Past service cost (397,080) – – – – –
Net interest cost 246,230 309,805 284,991 (54,179) 65,604 47,843
Remeasurements on other
long-term benefits – – – 146,905 240,058 (29,487)
=308,580
P =
P673,350 =695,044
P P138,132
= P577,071
= =166,529
P
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Remeasurement gains (losses) on regular retirement benefits recognized in OCI are as follows:
2020 2019 2018

Defined benefit obligation (P
=169,785) (P
=899,638) =1,096,910
P
Plan assets 86,692 (48,613) 12,637
(P
=83,093) (P
=948,251) =1,109,547
P
The net amounts in the consolidated statements of financial position arising from the Group’s obligation
in respect of its defined benefit plan and sick leave and vacation leave benefits are as follows:
Sick leave and vacation leave

Regular retirement benefits benefits
2020 2019 2020 2019
Present value of benefit
obligation (PVBO) =5,123,985
P =6,273,358
P =782,033
P =1,270,293
P
Fair value of plan assets
(FVPA) (598,444) (655,520) (98,243) (108,397)
=4,525,541
P =5,617,838
P =683,790
P =1,161,896
P
Changes in the PVBO are as follows:

2020 2019 2018 2020 2019 2018
Beginning of year =6,273,358 P
P =4,969,103 P =5,637,949 P=1,270,293 = P1,021,711 =948,126
P
Current service cost 459,430 363,545 410,053 45,406 68,673 148,173
Interest expense 277,076 345,542 299,332 59,797 73,834 54,082
Benefits paid from
retirement fund (651,203) (304,470) (281,321) (537,613) (120,174) (97,708)
Benefits paid from PAL’s
operating funds (1,007,381) – – – – –
Effect of curtailment (397,080) – – – – –
Remeasurement loss (gain)
arising from:
Financial assumptions 551,311 1,020,299 (404,568) (55,850) 226,249 (30,962)
Experience adjustments (381,526) (81,579) (658,061) – – –
Change in demographic
assumption – (39,082) (34,281) – – –
End of year =5,123,985 =
P P6,273,358 P=4,969,103 =782,033 P
P =1,270,293 P
=1,021,711
Changes in the FVPA are as follows:

2020 2019 2018 2020 2019 2018
Beginning of year =655,520 P
P =660,397 P =626,056 P =108,397 P =113,976 P =109,212
Interest income 30,846 35,737 14,341 5,096 8,230 6,239
Contributions 471,037 309,442 278,435 109,656 63,567 61,698
Benefits paid (645,651) (301,443) (271,072) (146,905) (63,567) (61,698)
Remeasurement gain (loss)
arising from return on
plan assets 86,692 (48,613) 12,637 21,999 (13,809) (1,475)
End of year =598,444
P =655,520
P =660,397
P P98,243
= =108,397
P =113,976
P
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The movements in accrued employee benefits are as follows:
Sick leave and vacation leave

Regular retirement benefits benefits
2020 2019 2018 2020 2019 2018
Beginning of year =5,617,838 P
P =4,308,706 P =5,011,893 = P1,161,896 =907,735 P
P =838,914
Retirement cost 308,580 673,350 695,044 100,107 134,277 196,016
Remeasurement losses
(gains) recognized in OCI 83,093 948,251 (1,109,547) (77,849) 240,058 (29,487)
Contributions (471,037) (309,442) (278,435) (109,656) (63,567) (61,698)
Benefits paid from PAL’s
operating funds (5,552) (3,027) (10,249) (159,294) (56,607) (36,010)
Benefits leaves utilized – – – (231,414) – –
End of year =5,532,922 P
P =5,617,838 P=4,308,706 =683,790 P
P =1,161,896 =907,735
P
The retirement plan’s assets and investments, which are being maintained by a trustee bank under
common control (see Note 18), consist of the following:
Cash and cash equivalents, which include regular savings and time deposits, earning interest at their
respective bank deposit rates; and
Investments in debt instruments, consisting of both short and long-term corporate notes of foreign
commercial banks, which earn interest at 9.03% and will mature on March 15, 2029.
The major categories of the plan assets of the Group as percentages of the fair value of total plan assets
as of December 31 are as follows:
2020 2019
Cash and cash equivalents 88% 87%
Investment in debt securities 12% 13%
100% 100%
The discount rates and future salary increase rates used in determining retirement obligation for the
defined benefit plans as of January 1 are as follows:
2020 2019 2018

Discount rates 2.82% to 4.13% 7.09% to 7.70% 5.67% to 5.79%
Future salary increase rate
Ground employees 6.00% and P =2,000 5% to 7% 5.00%
Cabin crew =3,750 to P
P =4,750 P2,500 to =
= P3,500 =3,000 to =
P P5,500
Pilots =2,500 to P
P =10,000 =2,000 to =
P P10,000 =5,500
P
As of December 31, 2020, the discount rate ranges from 4.40% to 5.03% per annum.
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The sensitivity analysis below has been determined based on reasonably possible changes of each
significant actuarial assumption on the defined benefit obligation as of December 31 assuming all other
assumptions were held constant:
2020 2019
Increase Effect on Increase Effect on
(decrease) PVBO (decrease) PVBO
Discount rate per annum 1.00% (353,739) 1.00% (397,932)
(1.00%) 407,538 (1.00%) 453,025
Future annual salary increase rate:
Ground employees 1.00% 285,631 1.00% 277,359
(1.00%) (33,551) (1.00%) (103,776)
+P=4,000 360,189 +P
=4,000 390,241
Cabin crew
+P=2,000 217,761 +P
=2,000 194,419
Pilots +P=4,000 255,572 +P
=4,000 229,821
+P=2,000 127,786 +P
=2,000 114,911
The weighted average duration of the defined benefit obligation of the Group as of December 31, 2020
is 10.10 years to 14.99 years (9.90 years to 15 years as of December 31, 2019). Expected contribution
to the retirement plan in 2020 amounts to P=1.15 billion.
The table below shows the payments that are to be made in the future years out of the defined benefit
obligation as of December 31:
2020 2019
Within one year P
=780,641 =850,279
P
More than one year to 5 years 2,005,501 2,831,737
More than 5 years to 10 years 2,968,321 3,773,292
More than 20 years 4,767,152 5,389,832
The funds are invested significantly in short-term investments and corporate and government bonds.
The Group’s management ensures that there will be sufficient assets to pay retirement benefits as they
fall due.
22. Income Taxes
a. The income tax expense (benefit) consists of the following:
2020 2019 2018

Current income tax P
=119,220 P149,701
= P63,143
=
Deferred income tax 7,094,417 (1,646,859) (3,785,364)
P
=7,213,637 (P
=1,497,158) (P
=3,722,221)
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b. The Group’s recognized net deferred income tax assets (liabilities), all relating to PAL, as of
December 31 are as follows:
2020 2019
Deferred income tax items recognized in profit or loss:
Deferred income tax assets on:
Lease liabilities P
=39,582,809 =42,096,088
P
NOLCO – 8,542,753
Reserves and others 1,083,207 1,025,939
Allowance for inventory losses 356,930 188,712
Impairment loss on investment properties – 54,988
Fair value adjustments - net 60,605 50,786
Unamortized past service cost 55,739 50,836
41,139,290 52,010,102
Deferred income tax liabilities on:
Right-of-use assets (38,425,594) (42,070,517)
Changes in exchange rates related to
nonmonetary assets and liabilities net (2,632,765) (2,992,346)
Estimated breakage for unutilized passenger
tickets (948,790) (1,000,370)
Unrealized foreign exchange adjustments - net (1,093,894) (603,300)
Prepaid commission and others (443,589) (274,789)
(43,544,632) (46,941,322)
(2,405,342) 5,068,780
Deferred income tax items recognized directly in OCI:
Deferred income tax assets on remeasurement
losses on defined benefit retirement plan 404,354 408,563
Deferred income tax liabilities on:
Revaluation increment in property (314,359) (357,929)
Net changes in fair value of financial assets at
FVTOCI (1,207) (1,671)
Investment property carried at deemed cost (88,969) (93,824)
(181) (44,861)
Net deferred income tax assets (liabilities) (P
=2,405,523) =5,023,919
P
Deferred income tax assets on lease liabilities and deferred income tax liabilities on right-of-use
assets and finance lease receivables pertain to lease arrangements that are treated as operating leases
for tax reporting purposes.
In accounting for deferred income tax relating to such operating leases, the Group considers both
the right-of-use asset and lease liability separately. The Group separately accounts for deferred
taxation on the taxable temporary difference and deductible temporary difference, which upon
initial recognition are equal and offset to zero. Deferred income tax is recognized on subsequent
changes to taxable and deductible temporary differences.
The utilization of the net deferred income tax assets is dependent on future taxable income in excess
of the income arising from the reversal of the taxable temporary differences. The future taxable
income is based on the forecast prepared by management considering the revenue enhancement
programs (see Notes 2 and 4).
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The Group did not recognize deferred income tax assets on the following deductible temporary
differences as of December 31:
2020 2019
NOLCO P
=53,923,796 =285,084
P
Excess of MCIT over RCIT 60,509 160,487
Allowance for:
ECL 4,617,320 4,541,262
Obsolescence 204,323
Impairment loss on assets held for sale and
property and equipment 11,746,662 1,997,099
Accrued retirement benefits 11,240,807 11,199,203
Provisions 76,665 97,746
Accrued expenses and others 66 3,786
c. As of December 31, 2020, the Parent Company’s NOLCO that are available for deduction against
future taxable income are as follows:
Year Incurred Amount Expired Balance Available Until

December 31, 2020 P12,593
= =
P P12,593
= December 31, 2025
December 31, 2019 11,083 11,083 December 31, 2022
December 31, 2018 20,177 20,177 December 31, 2021
December 31, 2017 26,780 (26,780) December 31, 2020
=117,446
P (P
=73,593) =43,853
P
As of December 31, 2020, PAL’s outstanding NOLCO that are available for deduction against
future taxable income are as follows:
Year Incurred Amount Applied Expired Balance Available Until

December 31, 2020 =
P33,815,239 =–
P =– =
P P33,815,239 December 31, 2025
December 31, 2019 8,760,733 – – 8,760,733 December 31, 2024
December 31, 2018 10,540,615 – – 10,540,615 December 31, 2023
December 31, 2017 8,743,702 – (8,743,702) – December 31, 2022
=61,860,289
P =–
P (P
=8,743,702) P
=53,116,587
As of December 31, 2020, Zuma’s NOLCO that can be claimed as deduction from future taxable
income are as follows:

December 31, 2020 P640,343
= =–
P =–
P =640,343
P December 31, 2025
December 31, 2019 61,561 – – 61,561 December 31, 2022
December 31, 2018 61,452 – – 61,452 December 31, 2021
December 31, 2017 61,449 – (61,449) – December 31, 2020
=
P824,805 =P– (P
=61,449) =
P763,356
APC’s NOLCO incurred in 2014 and 2013 amounting to P

=1.28 billion and =
P269.59 million were
applied against taxable income in 2019 and 2018, respectively. NOLCO incurred in 2013
amounting to =
P2.57 billion expired in 2018.
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The NOLCO incurred by ZUMA in taxable year 2020 can be claimed as deduction from the regular
taxable income for the next five (5) years pursuant to the Bayanihan to Recover As One Act.
d. PAL’s outstanding MCIT as of December 31, 2020 is available for application against future
income tax dues as follows:
Year incurred Amount Expired Balance Available Until

December 31, 2019 P60,509
= =–
P P60,509
= December 31, 2022
December 31, 2016 187,349 (187,349) – December 31, 2019
=514,566
P (P
=454,057) =60,509
P
APC’s outstanding MCIT as of December 31, 2020 is available for application against future
income tax dues:
December 31, 2019 =8,060
P (P
=8,060) =–
P =– December 31, 2022
P
=165,913
P (P
=94,864) (P
=71,049) =–
P
e. The reconciliation between the statutory tax rate and the Group’s effective tax rate follows:
2020 2019 2018

Statutory tax rate (30.00%) (30.00%) (30.00%)
Adjustments resulting from:
Movement in deductible temporary
differences for which no deferred
income tax assets were recognized 13.37% 1.05% (12.27%)
Derecognition of deferred income tax
assets on NOLCO and MCIT 12.77% – 1.95%
Interest income subjected to final tax or
exempted from tax (0.03%) (0.33%) (0.40%)
Nondeductible portion of interest
expense 0.01% 1.13% 0.12%
Nondeductible expenses (nontaxable
income) and others - net 14.83% 14.78% (9.50%)
Effective income tax rate 10.95% (13.37%) (50.10%)
f. RR No. 10-2002 defines expenses to be classified as entertainment, amusement and recreation

(EAR) expenses and sets a limit for the amount that is deductible for tax purposes, i.e., 1% of net
revenue for sales of services and 0.50% of net sales for sales of goods. EAR expenses amounted to
=2.53 million, P
P =13.56 million and = P19.24 million in 2020, 2019 and 2018, respectively.
g. As discussed in Note 1, PAL has been registered with the BOI as new operator of air transport
services on non-pioneer status under the Omnibus Investment Codes of 1987 (Executive Order
No. 226). For the six aircraft registered with the BOI in 2018, PAL can avail of bonus years in
certain cases, if applicable, provided that the aggregate ITH entitlement (regular and bonus years)
shall not exceed eight (8) years.
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23. Notes to Consolidated Statements of Cash Flows
Changes in liabilities arising from financing activities are as follows:
For the year ended December 31, 2020

Cash flows
December 31, Translation New December 31,
2019 Availments Payments Adjustment Net leases Others 2020
Notes payable =18,529,878
P =3,937,886
P (P
= 9,977,258) (P
= 1,109,055) (P
= 7,148,427) =–
P =–
P =11,381,451
P
Current portion of lease
liabilities 24,294,493 – (12,703,575) 1,988,006 (10,715,569) – 82,867,020 96,445,944
Current portion of
long-term loans 5,418,343 – (1,260,604) 461,060 (799,544) – 18,835,588 23,454,387
Noncurrent portion
of lease liabilities 150,308,019 – – (6,951,885) (6,951,885) 2,613,220 (90,383,390) 55,585,964
Noncurrent portion
of long-term loans 29,392,531 792,379 – (2,256,723) (1,464,344) – (18,811,693) 9,116,494
Total liabilities from financing
activities =227,943,264
P =4,730,265
P (P
= 23,941,437) (P
= 7,868,597) (P
= 27,079,769) =2,613,220
P (P
= 7,492,475) =195,984,240
P
For the year ended December 31, 2019

Cash flows
At January 1, Translation New December 31,
2019 Availments Payments Adjustment Net leases Others 2019
Notes payable =20,450,991
P =14,644,613
P (P
=15,809,218) (P
=756,508) (P
=1,921,113) =–
P =–
P =18,529,878
P
Current portion of lease
liabilities 32,939,906 – (33,359,728) (1,201,621) (34,561,349) – 25,915,936 24,294,493
Current portion of
long-term loans 8,863,410 – (8,535,542) (327,868) (8,863,410) – 5,418,343 5,418,343
Noncurrent portion
of lease liabilities 159,144,404 – – (5,903,819) (5,903,819) 14,587,842 (17,520,408) 150,308,019
Noncurrent portion
of long-term loans 24,798,147 10,940,336 – (917,311) 10,023,025 – (5,428,641) 29,392,531
Total liabilities from financing
activities =246,196,858
P =25,584,949
P (P
=57,704,488) (P
=9,107,127) (P
=41,226,666) =14,587,842
P =8,385,230
P =227,943,264
P
“Others” includes the effect of reclassification of non-current portion to current due to the passage of
time and amortization of direct costs capitalized. The Group classifies interest paid as cash flows from
operating activities.
Noncash investing activities include unpaid acquisition of property and equipment amounting to
=68.35 million, P
P =88.21 million and P =297.10 million as of December 31, 2020, 2019 and 2018,
respectively.
24. Commitments
Aircraft Purchase Agreements

Airbus aircraft
In August 2012, the Group entered into two separate Purchase Agreements with Airbus. The first
Purchase Agreement is for a firm order of 44 Airbus “A320 family” aircraft and options for 20 Airbus
“A320 family” aircraft for delivery in years 2013 to 2020. The “A320 family” consist of 34 Airbus
321-231 CEO and 10 Airbus 321-231 NEO. The other Purchase Agreement is for a firm order of 10
Airbus 330-300 aircraft and options for 10 Airbus 330-300 aircraft for delivery in years 2013 to 2016.
In September 2012, the Group exercised its right to purchase all of the 10 Airbus 330-300 option aircraft
by virtue of an amendment agreement to the Purchase Agreement. In March 2014, the Group entered
into an amendment agreement with Airbus and reduced its Airbus 330-300 aircraft orders by five and
simultaneously exercised eight of its options for the Airbus “A320 family” aircraft and purchased
Airbus 321-231 NEO aircraft for delivery in years 2020 to 2022. The Group did not exercise the
remaining 12 options.
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In January 2015, by virtue of another amendment to the Purchase Agreement, the Group purchased two
additional Airbus 321-231 NEO aircraft and revised the delivery of its firm orders of 10 Airbus
321-231 CEO aircraft from the original schedule of delivery in years 2015 to 2016 to years 2020 to
2024 and converted the same into Airbus 321-231 NEO aircraft.
In February 2016, the Group entered into a Memorandum of Understanding with Airbus for the
purchase of six Airbus 350-900 aircraft with an option to acquire six additional aircraft. This firm order
of six aircraft was delivered in 2018 and 2019 (see Note 10). The Group also signed a term sheet with
an engine manufacturer for maintenance support and purchase of spare engines to power the Airbus
350-900 aircraft. The cost of the engines to be installed on the aircraft are included in the aircraft
purchase price. The definitive Purchase Agreement was executed in April 2016 for six Airbus 350-900
aircraft for delivery in 2018 (four aircraft) and 2019 (two aircraft) with purchase options for six
additional aircraft. The purchase of the six Airbus 350-900 aircraft also coincided with the reduction of
nine Airbus 321-231 NEO aircraft from PAL’s existing order, thereby reducing the total A321-231
NEO order from 30 to 21 aircraft, deliveries of which are scheduled between 2018 and 2024. In the
same year, the agreements with an engine manufacturer for maintenance support and purchase of spare
engines to power the Airbus 350-900 aircraft was also executed. As of December 31, 2020, the
remaining aircraft that are for delivery in the future include 13 Airbus 321-271 NEO.
Total predelivery payments relating to the acquisition of the remaining undelivered Airbus aircraft
under the Purchase Agreements amounted to = P3.0 billion and P
=3.60 billion as of December 31, 2020
and 2019, respectively (see Note 10). Predelivery payments amounting to = P0.65 billion, =
P4.95 billion
and P
=11.80 billion were returned in 2020, 2019 and 2018, respectively, upon delivery of the aircraft.
Bombardier aircraft
In December 2016, the Group signed a Purchase Agreement with Bombardier, Inc. for the acquisition
of five DHC 8-400 (Q400 NextGen) turbo propeller aircraft for delivery from July to November 2017,
with purchase rights for an additional seven aircraft. In June 2017, the Group exercised the purchase
rights for an additional seven aircraft.
Total predelivery payments relating to the acquisition of remaining undelivered Bombardier aircraft
under the Purchase Agreements amounted to nil and P =394.80 million as of December 31, 2020 and
2019, respectively (see Note 10). Predelivery payments amounting to P
=394.80 million were returned in
2020 upon delivery of the aircraft.
Aircraft and Engine Leases - Group as Lessee

The future minimum lease payments related to the lease agreements of aircraft and engines as of
December 31 are as follows:
2020 2019
Due within one year P
=103,804,932 =31,703,238
P
Due after one year but within five years 70,673,432 109,681,615
More than five years – 64,992,593
P
=174,478,364 =206,377,446
P
Airbus aircraft
As of December 31, 2020, the Group has 24 Airbus 321-231 CEO, six Airbus 320-200, 15 Airbus 330-
300, six Airbus 350-900 and eight Airbus 321-271 NEO aircraft under lease arrangements (see Note
10). The carrying value of these Airbus aircraft under lease arrangements amounted to P =119.61 billion
as of December 31, 2020 (see Note 10). As of December 31, 2019, the Group has 24 Airbus 321-231
CEO, 13 Airbus 320-200, 15 Airbus 330-300, six Airbus 350-900 and seven Airbus 321-271 NEO
aircraft under lease arrangements (see Note 10). The carrying value of these Airbus aircraft under lease
arrangements amounted to P =143.52 billion as of December 31, 2019 (see Note 10).
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The Group recognized manufacturer’s credit amounting to = P30.70 million and P =125.17 million in 2020
and 2019, respectively, covering three Airbus aircraft, with a third-party lessor. The manufacturers’
credits were recognized under “Other income (charges) - net” in the consolidated statements of
Boeing aircraft
As of December 31, 2020 and 2019, the Group has 10 Boeing 777-300ER aircraft under lease
arrangements in each year, with total carrying value amounting to =
P51.90 billion as
Bombardier aircraft
As of December 31, 2020 and 2019, the Group has 12 and 10 DHC 8-400 (Q400 NextGen) under lease
arrangements, respectively, with total carrying value amounting to =
P4.19 billion and P
=4.75 billion as
Aircraft engine
As of December 31, 2020 and 2019, the Group has various engines under lease arrangements. The
carrying value of these engines amounted to P
=4.17 billion and =
P2.11 billion as of December 31, 2020
and 2019, respectively (see Note 10).
Short-term aircraft and engine leases

As of December 31, 2020 and 2019, the Group has short-term lease agreements on various aircraft and
engines ranging from three to 12 months.
Ground Property Leases

Minimum rental commitments under these lease contracts as of December 31 are as follows:
2020 2019
Due within one year P
=3,382,161 P637,124
=
Due after one year but within five years 55,275 1,559,104
More than five years – 1,831,856
P
=3,437,436 =4,028,084
P
PAL has an operating lease agreement with an entity under common control for the lease of a portion
of the PNB Financial Center Building. The lease is for a period of 10 years commencing on
November 1, 2007 and may be renewed upon mutual agreement of the parties. On November 1, 2017,
the lease agreement was renewed for another 10 years.
In 2013, PAL entered into an operating lease agreement with Manila International Airport Authority
(MIAA) for a parcel of land situated at Aviation Support Industrial Area 2 (formerly Nayong Pilipino)
to be utilized as an aircraft parking facility. In 2014, PAL required additional space and entered into a
lease agreement with PAGCOR for another parcel of land which is part of Airport Property for the
same purpose. The leases are for a period of 25 years and 20 years commencing on December 23, 2013
and August 1, 2014, respectively, and may be renewed upon mutual agreement of the parties.
The carrying value of these ground property under lease amounted to =

P2.25 billion and =
P2.72 billion
as of December 31, 2020 and 2019, respectively (see Note 10).
As of December 31, 2020 and 2019, the Group has short-term lease agreements on various ground
properties ranging from three to 12 months.
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Set out below are the amounts recognized in the statements of comprehensive income in relation to the
Group’s lease arrangement:
2020 2019 2018

Depreciation expense of right-of-use
assets (P
=18,901,557) (P
=23,834,329) –
Interest expense on lease liabilities (8,278,775) (9,510,279) (2,610,474)
Lease charges - short-term leases (4,006,262) (1,355,822) –
Lease charges - variable lease payments (63,838) (389,556) (366,022)
Lease charges under PAS 17 – – (18,622,207)
Total amounts recognized in profit or
loss (P
=31,250,432) (P
=35,089,986) (P
=21,598,703)
25. Capital Management
The primary objective of the Group’s capital management is to ensure that it maintains a strong credit
rating and healthy capital ratios in order to support its business and maximize shareholder value.
For the purpose of capital management, the Group considers its issued capital stock of the Parent
Company totaling to = P9.8 billion as its capital. The Group manages its capital structure and makes
adjustment to it, in light of changes in economic conditions. To maintain or adjust capital structure,
the Group may issue new shares or return capital to shareholders. The Group manages its capital by
monitoring its cash flows and debt levels. No changes were made in the objectives, policies or
processes in 2020 and 2019.
26. Financial Risk Management Objectives and Policies
Risk Management Structure

BOD
The BOD is mainly responsible for the overall risk management approach and for the approval of risk
strategies and policies of the Group.
Treasury Risk Committee

The Treasury Risk Committee has the overall responsibility for the development of financial risk
strategies, principles, frameworks, policies and limits. It establishes a forum of discussion of the
Group’s approach to financial risk issues (fuel price and foreign exchange risk, in particular) in order
to make relevant decisions.
Treasury Risk Office

The Treasury Risk Office is responsible for the comprehensive monitoring, evaluation and analysis of
the Group’s financial risks in line with the policies and limits set by the Treasury Risk Committee. The
Treasury Risk Office conducts mark-to-market valuation of derivative positions and daily calculation
and reporting of Value-at-Risk (VaR) amounts.
Financial Risk Management

The Group’s principal financial instruments, other than derivatives, consist of loans and borrowings
and cash and cash equivalents. The main purpose of these financial instruments is to raise financing
for the Group’s operations. The Group has various other financial assets and financial liabilities such
as receivables, short-term investments, accounts payable, accrued expenses and deposits which arise
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directly from its operations. The main risks arising from the use of financial instruments are market
risks (consisting of foreign exchange risk, cash flow interest rate risk and fuel price risk), liquidity risk,
counterparty risk and credit risk.
The Group uses derivative instruments to manage its exposures to foreign exchange and fuel price risks
arising from the Group’s operations and its sources of financing. The details of the Group’s derivative
transactions, including the risk management objectives and the accounting results, are discussed in this
note.
Market risks
The Group’s operating, investing and financing activities are directly affected by changes in foreign
exchange rates, interest rates and fuel prices. Increasing market fluctuations in these variables may
result in significant equity, cash flow and profit volatility risks for the Group. For this reason, the
Group seeks to manage and control these risks primarily through its regular operating and financing
activities, and through the execution of a documented hedging strategy. Management of financial
market risk is a key priority for the Group. The Group generally applies sensitivity analysis in assessing
and monitoring its market risks. Sensitivity analysis enables management to identify the risk position
of the Group as well as provide an approximate quantification of the risk exposures. Estimates provided
for foreign exchange risk, cash flow interest rate risk and fuel price risk are based on the historical
volatility for each market factor, with adjustments being made to arrive at what the Group considers to
be reasonably possible.
Foreign exchange risk

The Group is exposed to foreign exchange rate fluctuations arising from its revenue, expenses and
borrowings in currencies other than its functional currency. The Group manages this exposure by
matching its receipts and payments for each individual currency. Any surplus is sold as soon as
practicable. The Group also uses foreign currency options to economically hedge a portion of its
exposure.
The Group’s significant foreign currency-denominated monetary assets and liabilities (in Philippine
Peso equivalent) as of December 31 are as follows:
2020 2019
Financial Assets and Financial Liabilities
Financial assets:
Cash P1,633,747
= P3,453,017
=
Receivables 18,757,982 14,909,712
Others* 1,356,725 2,645,322
21,748,454 21,008,051
Financial liabilities:
Accounts payable and accrued expenses (8,464,111) (6,637,943)
Others** (1,604,881) (1,446,642)
(10,068,992) (8,084,585)
Net foreign currency-denominated financial assets 11,679,462 12,923,466
Nonfinancial Liabilities
Accrued employee benefits (11,452,573) (12,397,321)
Provisions (76,645) (97,726)
(11,529,218) (12,495,047)
Net Foreign Currency-denominated Monetary Assets =150,244
P =428,419
P
* Includes miscellaneous deposits and security deposits.
** Substantially pertaining to passenger taxes.
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The Group recognized net foreign exchange losses amounting to = P1.43 billion in 2020,
P P213.32 million in 2018 included under “Other income (charges) - net”
in the consolidated statements of comprehensive income arising from the translation and settlement of
these foreign currency-denominated financial and nonfinancial instruments. The Group’s foreign
currency-denominated exposures comprise primarily of Philippine peso (PHP) and Japanese Yen
(JPY). Other foreign currency exposures include Canadian dollar (CAD), Euro (EUR), Australian
dollar (AUD), Singaporean dollar (SGD), Chinese Yuan (CNY), Thai Baht (THB), Hong Kong dollar
(HKD), Saudi riyal (SAR) and Emirati dirham (AED).
Shown below is the impact on the Group’s income before income tax of reasonably possible changes
in the exchange rates of foreign currencies (CCY) against the USD, with all other variables held
constant.
December 31, 2020
Net Gain (Loss) Effect on
Income before Income Tax
Movement in Foreign Increase in Foreign Decrease in Foreign
Currency Exchange Rates Exchange Rates Exchange Rates
PHP 3.18% to 4.65% (P
=58,880) =58,880
P
JPY 6.47% (29,822) 29,822
Others* 0.40% to 9.21% (1,921) 1,921
Net (P
=90,623) =90,623
P
* Includes various currencies (i.e., CAD, EUR, AUD, SGD, CNY, THB, HKD, SAR, AED and others).
December 31, 2019

Net Gain (Loss) Effect on
Income before Income Tax
Movement in Foreign Increase in Foreign Decrease in Foreign
Currency Exchange Rates Exchange Rates Exchange Rates
PHP 3.96% to 5.05% =312,831
P (P
=312,831)
JPY 6.47% (59,597) 59,597
Others* 0.40% to 9.21% (189,172) 189,172
Net =64,062
P (P
=64,062)
* Includes various currencies (i.e., CAD, EUR, AUD, SGD, CNY, THB, HKD, SAR, AED and others).
The Group’s major currency derivatives consist of options to buy USD and sell JPY. As of
December 31, 2020 and 2019, all foreign exchange derivatives expired and no new foreign exchange
derivative deals were entered in 2020 and 2019, respectively. In 2018, other currency derivatives
consist of options to buy USD and sell AUD, CAD and SGD. Before taking into account the effect of
income taxes, income would have either increased by =
P48.40 million or decreased by P=4.90 million
had the percentage change in JPY been 8.61%. There is no other impact on the Group’s equity other
than those affecting profit and loss.
Cash flow interest rate risk

The Group’s exposure to cash flow interest rate risk arises from the regular repricing of interest on its
floating-rate loans. The Group’s policy on interest rate risk is designed to limit the Group’s exposure
to fluctuating interest rates. The ratio of floating-rate long-term loans to the total borrowings is 0.84:1
and 0.83:1 as of December 31, 2020 and 2019, respectively.
Income before income tax in 2020 and 2019 would either decrease by P =712.53 million and
=499.84 million or increase by =
P499.84 million, respectively, if the USD interest
rate for the periods had been higher or lower by 157 basis points and 91 basis points, respectively.
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There is no other impact on the Group’s equity other than those already affecting profit or loss. The
Group assumes concurrent movements in interest rates and parallel shifts in the yield curves.
Fuel price risk

The Group is exposed to price risk on jet fuel purchases. This risk is managed by a combination of
strategies with the objective of managing price levels within an acceptable band through various types
of derivatives. The Group implements such strategies to manage and minimize the risks within
acceptable risk parameters.
The Group’s fuel derivatives are viewed as economic hedges and are not held for speculative purposes.
The Group uses a VaR computation to estimate the potential three-day loss in the fair value of its fuel
derivatives. The VaR computation is a risk analysis tool designed to statistically estimate the maximum
potential loss at a given confidence interval from adverse movement in fuel prices.
Assumptions and limitations of VaR

The VaR methodology employed by the Group uses a three-day period due to the assumption that not
all positions could be undone in a single day given the size of the positions. The VaR computation
makes use of Monte Carlo simulation with multi-factor models. Multi-factor models ensure that the
simulation process takes into account mean reversion tendency and seasonality of fuel prices. It
captures the complex dynamics of the term structure of commodity markets, such as contango and
backwardation. The VaR estimates are made assuming normal market conditions using a 95%
confidence interval and are determined by observing market data movements over a 90-day period.
The estimated potential three-day losses on its fuel derivative transactions, as calculated in the VaR
model, amounted to P=83.18 million, P=119.86 million and = P281.52 million as of December 31, 2020,
2019 and 2018, respectively.
The high, average and low VaR amounts for the period January 1 to December 31 are as follows:
High Average Low

2020 P
=921,607 P
=104,561 (P
=1,282,115)
2019 443,817 268,610 103,395
2018 281,516 35,973 474
Liquidity risk
Liquidity risk arises from the possibility that the Group may encounter difficulties in raising funds to
meet commitments from financial instruments (e.g., long-term obligations) or that a market for
derivatives may not exist in some circumstances.
The Group’s objectives to manage its liquidity profile are: (a) to ensure that adequate funding is
available at all times; (b) to meet commitments as they arise without incurring unnecessary costs;
(c) to be able to access funding when needed at the least possible cost; and (d) to maintain an adequate
time spread of refinancing maturities.
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The tables below summarize the maturity analysis of the Group’s financial liabilities as of
December 31 based on contractual undiscounted payments (principal and interest):
2020
<1 Year >1-<2 Years >2-<3 Years >3-<4 Years >4-<5 Years >5 Years Total
Notes payable* = 11,415,403
P =–
P =–
P =–
P =–
P =–
P P
= 11,415,403
Accounts payable and
accrued expenses** 48,771,276 – – – – – 48,771,276
60,186,679 – – – – – 60,186,679
Lease liabilities *** 96,699,472 21,577,187 20,800,155 19,310,907 20,527,867 1,966,379 180,881,967
Long-term debt**** 23,499,239 2,723,384 2,567,886 2,901,165 3,264,940 260,141 35,216,755
Derivative instruments:
Fuel derivatives 201,936 – – – – – 201,936
Premium liability 1,993,915 – – – – – 1,993,915
122,394,562 24,300,571 23,368,041 22,212,072 23,792,807 2,226,520 218,294,573
= 182,581,241 P
P = 24,300,571 P= 23,368,041 P
= 22,212,072 P
= 23,792,807 P
= 2,226,520 P
= 278,481,252
*Includes interest amounting to =P33,952
**Excludes nonfinancial liabilities amounting to =
P7,562,264
***Includes interest amounting to =P 25,850,059
****Includes interest amounting to = P2,645,874
2019
Notes payable* =18,599,147
P =–
P =–
P =–
P =–
P =–
P =18,599,147
P
Accounts payable and accrued
expenses** 17,166,775 – – – – – 17,166,775
35,765,922 – – – – – 35,765,922
Lease liabilities *** 32,340,374 31,116,940 29,267,494 27,879,145 22,977,100 66,824,477 210,405,530
Long-term debt**** 6,861,619 6,637,084 6,375,858 6,145,013 5,910,826 7,935,973 39,866,373
Derivative instruments:
Fuel derivatives (29,317) 198,590 – – – – 169,273
Premium liability 265,682 – – – – – 265,682
39,438,358 37,952,614 35,643,352 34,024,158 28,887,926 74,760,450 250,706,858
=75,204,280 P
P =37,952,614 =P35,643,352 =
P34,024,158 =
P28,887,926 =
P74,760,450 =
P286,472,780
*Includes interest amounting to =P69,269
**Excludes nonfinancial liabilities amounting to =P7,159,232
***Includes interest amounting to =P 35,803,018
****Includes interest amounting to = P5,055,500
The Group’s total financial liabilities to be settled currently amounting to P =182.5 billion and
=75.20 billion as of December 31, 2020 and 2019, include liabilities aggregating to =
P P60.2 billion and
=35.77 billion, respectively, that management considers as working capital. Accounts payable and
P
accrued expenses of = P48.8 billion and =
P17.17 billion as of December 31, 2020 and 2019, respectively,
include liabilities that are payable on demand but are expected to be renegotiated in the future. For the
other liabilities amounting to = P122.4 billion and =P39.44 billion as of December 31, 2020 and 2019,
respectively, management expects to settle these from the Group’s cash to be generated from
operations.
The following are the Group’s financial assets as of December 31 used to manage liquidity risk,
particularly those financial liabilities that will mature in less than a year:
2020
Cash = 2,116,753
P =–
P =–
P =–
P =–
P =–
P =
P2,116,753
Loans and receivables:
Cash equivalents 194,049 – – – – – 194,049
Short-term investments 55,862 – – – – – 55,862
Receivables - net* 19,336,119 – – – – – 19,336,119
= 21,702,783
P =–
P =–
P =–
P =–
P =– P
P = 21,702,783
*Excludes receivables arising from statutory requirements, net of allowance, amounting to =
P4,153,461 .
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2019
Cash =9,013,994
P =–
P =–
P =–
P =–
P =– P
P =9,013,994
Loans and receivables:
Cash equivalents 6,038,144 – – – – – 6,038,144
Short-term investments 170,961 – – – – – 170,961
Receivables - net* 19,736,263 – – – – – 19,736,263
=34,959,362
P =–
P =–
P =–
P =–
P =– =
P P34,959,362
*Excludes receivables arising from statutory requirements, net of allowance, amounting to =
P4,263,973.
Counterparty risk
The Group’s counterparty risk encompasses issuer risk on investment securities, credit risk on cash in
banks, time deposits and security deposits and settlement risk on derivatives. The Group manages its
counterparty risk by transacting with counterparties of good financial condition and selecting
investment grade securities. Settlement risk on derivatives is managed by limiting aggregate exposure
on all outstanding derivatives to any individual counterparty, taking into account its credit rating. The
Group also enters into master netting arrangements and implements counterparty and transaction limits
to avoid concentration of counterparty risk.
The tables below show the maximum counterparty exposure as of December 31 after taking into
account information about rights of offset and related arrangements for financial instruments subject to
master netting agreements:
2020
Gross
amounts
offset in Net amount
accordance presented in
Gross with the statements of Master Fair value
maximum offsetting financial netting of financial
exposure criteria position agreement collateral Net exposure
Financial Assets
Cash in banks and cash equivalents P2,310,802
= =–
P P
= 2,310,802 =–
P =–
P P2,310,802
=
Receivables - net 23,489,580 – 23,489,580 – 1,826,027 21,663,553
Derivative assets 4,162,634 – 4,162,634 4,162,634 – –
Margin deposits, lease deposits and others 20,485,256 – 20,485,256 – – 20,485,256
= 50,448,272
P – P
= 50,448,272 =
P4,162,634 =
P1,826,027 P
= 44,459,611
Financial Liabilities
Derivative liabilities = 4,364,570
P =–
P P
= 4,364,570 =–
P =–
P = 4,364,570
P
2019
Gross
Amounts
offset in Net amount
accordance presented in
Gross with the statements of Fair value of
maximum offsetting financial Master netting financial
exposure criteria position agreement collateral Net exposure
Financial Assets
Cash in banks and cash equivalents =15,007,071
P =–
P P
=15,007,071 =–
P =–
P =15,007,071
P
Receivables - net 24,570,867 – 24,570,867 – 2,300,297 22,270,570
Derivative assets 5,047,846 – 5,047,846 5,016,612 – 31,234
Margin deposits, lease deposits and others 15,616,886 – 15,616,886 – – 15,616,886
=60,242,670
P – =
P60,242,670 =5,016,612
P =
P2,300,297 =52,925,761
P
Derivative liabilities =5,217,145
P =–
P =5,217,145
P =–
P =–
P =5,217,145
P
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In an event of default or pre-termination of derivative contracts, the parties can apply master netting
agreement. In 2020 and 2019, there was no default or pre-termination event which required the
application of the master netting agreements.
Credit risk
The Group’s exposure to credit risk arises from the possibility that agents, financial institutions and
other counterparties may fail to fulfill their agreed obligations and that the collaterals held may not be
sufficient to cover the Group’s claims. To manage such risk, the Group, through its Credit and
Collection Department, employs a credit evaluation process prior to the accreditation or
re-accreditation of its travel and cargo agents. The Group considers, among other factors, the size,
paying habits and the financial condition of the agents. To further mitigate the risk, the Group requires
from its agents financial guarantees in the form of cash bonds, letters of credit and assignment of time
deposits. The carrying value of these collaterals held as of December 31, 2020 and 2019 amounted to
=1.83 billion and =
P P2.30 billion, respectively.
The Group, to the best of its knowledge, has no significant concentration of credit risk with any
counterparty.
Credit quality per class of financial assets

The credit quality of receivables is managed by the Group using internal credit quality ratings. High
grade accounts consist of passenger and cargo receivables from agents with good financial condition
and which management believes to be reasonably assured to be recoverable. Standard grade accounts
consist of passenger and cargo receivables from agents with relatively low defaults. Substandard grade
accounts, on the other hand, are receivables from agents with history of defaulted payments. Accounts
from these agents are consistently monitored in order to identify any potential adverse changes in the
credit quality. Receivables from IATA which consist of receivables from other airlines through the
IATA clearing house are deemed high grade accounts as the expectation of default is minimal.
The Group considers its other financial assets as high grade as they consist of accounts with good
financial standing and with relatively low defaults.
The aging per class of receivable and the expected credit loss as of December 31 follow:
2020
Past Due but not Impaired
High Standard Substandard Over 30 Over 60 Over 90
Grade Grade Grade Days Days Days ECL Total
General traffic = 102,145
P = 3,727
P = 2,462,141
P = 361,586
P = 580,575 P
P = 3,206,750 (P
=1,092,850) =P6,746,931
Related parties 1,052,422 4,138,040 12,464 13,446 15,321 4,111,752 (160,550) 8,124,586
Non-trade (80,188) 1,062,802 22,375 270,460 6,153,762 (3,607,344) 3,757,319
Total = 1,154,567 P
P = 4,061,579 = 3,537,407
P = 397,407
P = 866,356 P
P = 13,472,264 (P
=4,860,744) P
= 18,628,836
2019
Past Due but not Impaired
Standard Substandard Over 30 Over 60 Over 90
High Grade Grade Grade Days Days Days ECL Total
General traffic =3,719,393 P
P =1,127,990 =207,553
P =1,063,031
P =102,543 P
P =1,531,815 (P
=906,924) P=6,845,401
Related parties 385,045 4,537,869 13,114 14,178 16,153 4,323,959 (61,370) 9,228,948
Non-trade 106,595 1,777,339 77,674 331,421 5,235,195 (3,569,031) 3,959,193
Total =4,104,438 P
P =5,772,454 =1,998,006
P =1,154,883
P =450,117 P=11,090,969
P (P
=4,537,325) P
=20,033,542
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27. Fair Value Measurements
Fair Values
The table below presents the Group’s financial instruments as of December 31 measured at fair value
and financial instruments for which fair values are disclosed:
2020 2019
Carrying Carrying
Value Fair Value Value Fair Value
Financial Assets
Financial assets at amortized cost - margin deposits,
lease deposits and others P
=20,485,256 P
=20,485,256 =15,616,886
P =15,618,158
P
Financial assets at FVTOCI 997,206 997,206 1,955,453 1,955,453
Derivative asset - fair value through profit or loss 4,162,634 4,162,634 5,047,846 5,047,846
Derivative liabilities - fair value through profit
or loss 4,364,570 4,364,570 5,217,145 5,217,145
Financial liabilities carried at amortized cost:
Lease liabilities 152,032,626 175,580,732 159,932,271 205,157,374
Long-term debt 32,570,882 34,150,404 34,810,873 36,152,479
The carrying amounts of cash and cash equivalents, short-term investments, receivables, notes payable,
accounts payable and accrued expenses approximate their fair value due to the short-term nature of
these accounts.
The following methods and assumptions are used to estimate the fair value of each class of financial
instruments that is different from their carrying amount:
Financial assets at FVTOCI

The fair values of quoted equity investments are based on market prices in active markets.
As of December 31, 2020 and 2019, the fair value of unquoted equity instruments is based on
Level 3. Significant inputs in determining the fair value are the market prices of the shares of
comparable companies.
Margin deposits, lease deposits and others

The fair value of margin deposits, lease deposits and others are determined using discounted cash flow
techniques based on prevailing market rates. Discount rates used are nil as of December 31, 2020 and
2019.
Long-term obligations
The fair value of long-term obligations (whether fixed or floating) is generally based on the present
value of expected cash flows with discount rates that are based on risk-adjusted benchmark rates
(in the case of floating rate liabilities with quarterly repricing, the carrying value approximates the fair
value in view of the recent and regular repricing based on current market rates). The discount rates
used for USD-denominated loans ranged from 1.19% to 3.06% and 2.65% to 3.06% as of
December 31, 2020 and 2019, respectively.
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Derivatives
The fair value of derivatives is determined by the use of either present value methods or standard option
valuation models. The valuation inputs on these derivatives are based on assumptions developed from
observable information, including, but not limited to, the forward curve derived from published or
futures prices adjusted for factors such as seasonality considerations and the volatilities that take into
account the impact of spot prices and the long-term price outlook of the underlying commodity and
currency.
Fair Value Hierarchy
As of December 31, 2020
Fair value measurement using

Quoted prices Significant Significant
in active observable unobservable
markets inputs inputs
Total (Level 1) (Level 2) (Level 3)
Assets and liabilities measured at fair
value:
Financial assets at FVTOCI (Note 12):
Quoted equity shares =939,267
P =939,267
P P–
= =–
P
Unquoted equity shares 57,939 – – 57,939
Derivative financial assets – fuel derivatives
(Notes 8 and 12) 4,162,634 – 4,162,634 –
Derivative financial liabilities – fuel
derivatives (Notes 14 and 16) 4,364,570 – 4,364,570 –
Property and equipment (Note 10) 1,000,703 – – 1,000,703
Assets held for sale (Note 10) 115,255 – – 115,255
Assets and liabilities for which fair values
are disclosed:
Margin deposits, lease deposits
and others (Note 12) 20,485,256 – 20,485,256 –
Lease liabilities (Note 15) 175,580,732 – 175,580,732 –
Long-term debt (Note 15) 34,150,404 – 34,150,404 –
Investment properties (Note 11) 2,629,980 – – 2,629,980
As of December 31, 2019

Assets and liabilities measured at fair
value:
Financial assets at FVTOCI (Note 12):
Quoted equity shares =1,893,789
P =1,893,789
P P–
= =–
P
Unquoted equity shares 61,664 – – 61,664
Derivative financial assets - fuel derivatives
(Notes 8 and 12) 5,047,846 – 5,047,846 –
Derivative financial liabilities - Fuel
derivatives (Notes 14 and 16): 5,217,145 – 5,217,145 –
Property and equipment (Note 10) 1,157,364 – – 1,157,364
Assets held for sale (Note 10) 1,723,615 – – 1,723,615
(Forward)
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Assets and liabilities for which fair values
are disclosed:
Margin deposits, lease deposits
and others (Note 12) P15,616,886
= P–
= P15,616,886
= P–
=
Lease liabilities (Note 15) 205,157,374 – 205,157,374 –
Long-term debt (Note 15) 36,152,479 – 36,152,479 –
Investment properties (Note 11) 8,080,637 – – 8,080,637
There were no transfers between hierarchy levels during the years ended December 31, 2020 and 2019.
Derivative Financial Instruments

The derivative financial instruments set out in this section have been entered into to achieve the Group’s
risk management objectives. The Group’s derivative financial instruments are accounted for as fair
value through profit or loss.
As of December 31, 2020 and 2019, outstanding fuel derivative asset amounted to = P4.16 billion and
=5.05 billion, respectively and outstanding fuel derivative liability amounted to P
P =4.36 billion and
=5.22 billion, respectively.
P
As of December 31, 2020 and 2019, the positive and negative fair values of derivative positions that
will be settled in 12 months or less are classified under “Other current assets” (P =4.16 billion as of
December 31, 2020 and = P5.05 billion as of December 31, 2019) and “Accrued expenses”
(P
=4.36 billion as of December 31, 2020 and = P5.22 billion as of December 31, 2019). The positive and
negative fair values of derivative positions that will be settled in more than 12 months are classified
under “Other Non-current assets” (nil as of December 31, 2020 and P =2.84 billion as of
December 31, 2019) and “Other Non-current liabilities” (nil as of December 31, 2020 and = P3.04 billion
as of December 31, 2019).
Fuel derivatives
The Group is dependent on jet fuel to run its operations, and jet fuel costs have become a larger portion
of the Group’s expenses due to the increase in all energy prices over the years. Jet fuel consumption is
20.61%, 31.28% and 32.45% of its operating expenses for the years ended December 31, 2020, 2019
and 2018, respectively. In order to hedge against adverse market condition and to be able to acquire jet
fuel at the lowest possible cost, the Group enters into fuel derivatives. The Group does not purchase or
hold any derivative financial instruments for trading purposes.
There are no outstanding fuel derivatives accounted for as cash flow hedges as of December 31, 2020
and 2019.
The Group’s fuel derivatives not accounted for as cash flow hedges still provide economic hedges
against jet fuel price risk. These fuel derivatives are carried at fair values in the consolidated statements
of financial position, with fair value changes reported immediately in profit or loss. The outstanding
notional amounts of long fuel derivative assets and liabilities not accounted for as cash flow hedges are
13,860,000 and 21,500,000 barrels as of December 31, 2019, respectively (nil in 2020).
The outstanding notional amounts of short fuel derivative assets and liabilities not accounted for as
cash flow hedges totaled 21,575,000 and 20,405,000 barrels as of December 31, 2020 and 19,320,000
and 27,460,000 barrels as of December 31, 2019, respectively.
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Structured currency derivatives

The Group enters into structured currency derivatives consisting of option structures with combination
of calls and puts. These contracts are carried at fair value in the consolidated statements of financial
position and the fair value changes from these derivatives are recognized directly in profit or loss.
There is no outstanding structured currency derivative as of December 31, 2020 and 2019.
Fair value changes on derivatives

The net changes in the fair values of all derivative instruments are as follows:
2020 2019 2018

Beginning of year (P
=169,273) (P
=951,669) (P
=43,689)
Net changes in fair values of derivatives 3,473,268 654,846 (923,018)
Fair value of settled instruments (2,620,711) 127,550 15,038
End of year P
=683,284 (P
=169,273) (P
=951,669)
28. Segment Information
The Group has one reportable operating segment, which is the airline business (system-wide). This is
consistent with how the Group’s management internally monitors and analyzes the financial
information for reporting to the chief operating decision-maker, who is responsible for allocating
resources, assessing performance and making operating decisions.
The revenues of the operating segment are mainly derived from rendering transportation services and
all sales are made to external customers.
Segment information for the reportable segment is shown in the following table:
2020 2019 2018

Revenue P
=55,263,966 =154,536,731
P =150,481,358
P
Interest income 888,522 394,440 362,554
Financing charges 13,696,052 12,019,048 4,827,036
Depreciation, amortization and
obsolescence 25,803,150 25,706,551 8,500,202
Net loss (7,729,478) (5,658,081) (6,963,460)
Reportable segment assets 227,899,364 317,829,480 199,198,850
Reportable segment liabilities 296,005,919 312,931,889 188,511,715
The reconciliation of total revenue reported by reportable operating segment to revenue in the
consolidated statements of comprehensive income is presented in the following table:
2020 2019 2018

Total segment revenue of
reportable operating segments P
=55,243,745 =154,271,601
P =150,256,735
P
Non-transport revenue 20,221 265,130 224,623
Total revenue P
=55,263,966 =154,536,731
P =150,481,358
P
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The reconciliation of total loss reported by the reportable operating segment to total comprehensive
loss in the consolidated statements of comprehensive income is presented in the following table:
2020 2019 2018

Total segment loss of reportable
segments (P
=7,652,766) (P
=5,658,081) (P
=6,963,460)
Add (deduct) unallocated items:
Non-transport revenue and
other income 20,221 265,130 224,623
Non-transport expenses and
other charges (58,237,578) (5,806,923) (690,942)
Income tax benefit (expense) (7,213,637) 1,497,158 3,722,221
Net loss (73,083,760) (9,702,716) (3,707,558)
Other comprehensive income
(loss) 79,981 (496,238) 864,153
Total comprehensive loss (P
=73,003,779) (P
=10,198,954) (P
=2,843,405)
The Group’s major revenue-producing asset is the fleet owned by the Group, which is employed across
its route network (see Note 10).
Disaggregation of Revenue
The disaggregation of the total segment revenue is presented in the consolidated statements of
29. Events Connected to COVID-19 Outbreak
On December 31, 2019, China first reported a cluster of pneumonia cases in Wuhan, Hubei province.
By the first week of January 2020, China declared the outbreak of a new coronavirus (first known as
2019-nCoV). On the second week of January 2020, Chinese authorities reported sudden spike of cases
including confirmed cases outside Wuhan which eventually led to the lockdown of the entire city of
Wuhan.
At around this time, other countries started to report confirmed cases of the virus including Thailand,
Japan, Singapore, Australia, Malaysia, Canada, France, the Middle East and the United States. The first
confirmed case in the Philippines was announced on January 30, 2020.
By the end of January 2020, the World Health Organization (WHO) declared the 2019-nCoV a public
health emergency of international concern and subsequently renamed the disease COVID-19.
Following the announcement, more countries started to apply strict border measures restricting the
entry of foreign nationals with history travel to China.
On February 2, 2020, the Philippine Government issues its first border restrictions on foreign nationals
with travel history to China and its Special Administrative Region (SAR). The travel restriction also
prohibited all Filipinos from travelling to China and its SARs. Accordingly, Philippine carriers,
including PAL, had to cancel flights to and from China and its SARs.
On March 6, 2020, the Philippine Government announced new confirmed cases including possible local
transmission. And by March 8, 2020, with the growing number of cases in the country, the Philippine
Government placed the entire Philippines under a state of public health emergency because of the
COVID-19 threat.
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On March 11, 2020, the WHO declared the COVID-19 outbreak as a global pandemic due to the
significant number of cases and countries affected globally.
On March 12, 2020, the Philippine government issued a resolution placing the entire National Capital
Region (Metro Manila) under community quarantine, thereby suspending land, domestic, air and
domestic sea travel to and from Metro Manila effective March 15, 2020 until April 14, 2020. For
international travel, restrictions were imposed on those arriving from countries with localized COVID-
19 transmissions, except for citizens of the Philippines, including foreign spouse and children, or
holders of permanent resident visas and diplomat visas.
In compliance with the directives of the government, PAL suspended operations of its domestic flights
to or from Metro Manila. International flights and cargo domestic operations, on the other hand,
remained in operation.
However. in a move to further contain the COVID-19 outbreak, on March 16, 2020, Presidential
Proclamation Order No. 929 was issued, declaring State of Calamity throughout the Philippines for a
period of six months and imposed an enhanced community quarantine (ECQ) throughout the island of
Luzon until April 12, 2020 unless earlier lifted or extended, effectively restricting movement of people.
The subsequent implementation of ECQ made it impossible for PAL to operate its remaining
international flights. PAL suspended its operation on March 27, 2020. Subsequently, the Philippine
Government extended the ECQ until May 15, 2020 and then extended it again as Modified Enhanced
Community Quarantine (MECQ) until May 31, 2020. From June 1, 2020 up to present, the Philippines
is still under quarantine restrictions which continuously affect the domestic and international travel.
The COVID-19 outbreak and the measures taken have caused disruptions to businesses and economic
activities, and its impact on businesses continue to evolve. Consequently, the Group’s passenger
operations have also been disrupted, resulting to temporary suspension and limited operations of its
flights both for domestic and international routes during the strict community quarantine status of the
country. These events and conditions, including the status of operations as discussed in Note 2, indicate
that a material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a
going concern. The Group’s plans for future actions to mitigate the impact of these events and
conditions are disclosed in Note 2.
Furthermore, on March 24, 2020, the President signed into law Republic Act (RA) 11469, referred to
as Bayanihan to Heal as One Act (the Bayanihan Law), which is valid for three months unless extended
by the Congress of the Philippines. Under Section 4 of RA 11469, the President has the power to adopt
temporary emergency measures to respond to crisis brought by the pandemic. These authorized powers
include the following, among others which are cited in Section 4 of RA 11469:
Adopt and implement the measures to prevent further spread of the coronavirus, following the
World Health Organization (WHO) guidelines;
Ensure the availability of credit to the productive sectors of the economy by lowering the lending
interest rates and reserve requirements of lending institutions; and
Direct all banks and other financial institutions, including GSIS, SSS and Pag-IBIG Fund, to
implement a 30-day grace period for payments of loans and credit card bills (under Section 4 aa).
On April 1, 2020, the Department of Finance signed the Implementing Rules and Regulations (IRR) on
the 30-day extension for loan payments as mandated under Section 4 (aa) of the Bayanihan Law. The
IRR provides, among others, that all covered institutions, which shall mean all lenders, but not limited
to banks, shall implement a 30-day grace period for all loans with principal and/or interest falling due
within the ECQ without incurring interest on interest, penalties, fees and other charges. The initial 30-
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day grace period shall be extended if the ECQ period is extended by the President pursuant to his
emergency powers under RA 11469.
In addition, the IRR provides that no documentary stamp taxes (DST) shall be imposed as a
consequence of the relief granted and for credit extensions and credit restructuring during the ECQ
period. Also, the accrued interest for the 30-day grace period may be paid by the borrower on staggered
basis over the remaining life of the loan.
To the extent determinable, the Group considered the impact of the COVID-19 outbreak on its financial
position and performance for the year ended December 31, 2020. However, the outbreak could have
further material impact on its 2021 financial results and even period thereafter. Considering the
evolving nature of the pandemic, the Group cannot determine at this time the impact to its consolidated
financial position, consolidated results of operations and consolidated cash flows.
30. Events After the Reporting Date
President Rodrigo Duterte signed into law on March 26, 2021 the Corporate Recovery and Tax
Incentives for Enterprises (CREATE) Act to attract more investments and maintain fiscal prudence and
stability in the Philippines. Republic Act (RA) 11534 or the CREATE Act introduces reforms to the
corporate income tax and incentives systems. It takes effect 15 days after its complete publication in
the Official Gazette or in a newspaper of general circulation or April 11, 2021.
The following are the key changes to the Philippine tax law pursuant to the CREATE Act which have
an impact on the Company:
Effective July 1, 2020, regular corporate income tax (RCIT) rate is reduced from 30% to 25% for
domestic and resident foreign corporations. For domestic corporations with net taxable income not
exceeding = P5.0 million and with total assets not exceeding P
=100.0 million (excluding land on which
the business entity’s office, plant and equipment are situated) during the taxable year, the RCIT
rate is reduced to 20%.
Minimum corporate income tax (MCIT) rate reduced from 2% to 1% of gross income effective
July 1, 2020 to June 30, 2023.
Imposition of improperly accumulated earnings tax (IAET) is repealed.
For investments prior to effectivity of CREATE:
o Registered business enterprises (RBEs) granted only an ITH - can continue with the availment
of the ITH for the remaining period of the ITH.
As clarified by the Philippine Financial Reporting Standards Council in its Philippine Interpretations
Committee Q&A No. 2020-07, the CREATE Act was not considered substantively enacted as of
December 31, 2020 even though some of the provisions have retroactive effect to July 1, 2020. The
passage of the CREATE Act into law on March 26, 2021 is considered as a non-adjusting subsequent
event. Accordingly, current and deferred taxes as of and for the year ended December 31, 2020
continued to be computed and measured using the applicable income tax rates as of December 31, 2020
(i.e., 30% RCIT / 2% MCIT) for financial reporting purposes.
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Applying the provisions of the CREATE Act, PAL would have been subjected to lower regular
corporate income tax rate of 25% effective July 1, 2020.
Based on the provisions of set by the Revenue Memorandum Circular (RMC) No. 50-2021 dated
April 5, 2021 issued by the BIR, the prorated RCIT and MCIT rates of the Group for CY2020 is
27.5% and 1.5%, respectively. The resulting lower income tax rates do not have significant impact
to the Group.
This will result in lower deferred income tax liabilities - net as of December 31, 2020 and provision for
deferred income tax for the year then ended by = P490.92 million and = P490.89 million, respectively.
These reductions will be recognized in the 2021 financial statements.
Approval of the Plan

As discussed in Note 2, PAL filed with the United States Bankruptcy Court in the Southern District of
New York (the “Court”) a voluntary petition for relief under Chapter 11 of the Bankruptcy Code
(“Chapter 11 Filing”) whereby it sought, among others, to be authorized to continue to operate its
business and manage its operations as a debtor-in-possession pursuant to Sections 1107 and 1108 of
the Bankruptcy Code.
The Chapter 11 Filing is part of the Group’s overall plan to position itself for the post-pandemic
environment. Apart from protection from the Court, the Group’s plan included resizing and reshaping
its operations, permanent restructuring of its obligations and broad recapitalization.
Prior to the Chapter 11 Filing and in order to ensure a smooth confirmation process, lengthy discussions
were held with key stakeholders over the last several months and RSAs were negotiated with
substantially all of PAL’s aircraft lessors and lenders outlining the material terms for a proposed Plan.
In summary, the RSAs and the Plan contemplate (a) the reduction of PAL’s aircraft related obligations,
(b) a $505.00 million infusion of working capital to fund PAL’s ongoing operations during the Chapter
11 Case of which, $255.00 million will come from PHI and will be subsequently converted into equity
in PAL, (c) optimizing PAL’s fleet size, composition and ownership costs as required by the new
market, (d) maintaining and enhancing PAL’s key contracts and business partners to strengthen its
viability during the pending COVID-19 pandemic and beyond, and (e) obtaining commitments for up
to $150.00 million exit facility from new investors to ensure PAL has adequate liquidity and runway to
complete its restructuring.
PAL also secured confirmation of support for the Plan from primary original equipment manufacturers
(“OEM”) and maintenance, repair and overhaul service providers (“MRO”).
The Plan was finalized and submitted to the Court on October 13, 2021 and a Disclosure Statement
Hearing was held on November 12, 2021. After the hearing, solicitation of votes commenced for which
the Court required creditors to submit their votes confirming the Plan by December 10, 2021. The Plan
was approved on December 17, 2021.
A summary of significant activities under the Chapter 11 Filing vis-a-vis some of the relevant terms of
the Plan are as follows:
(a) In the hearing scheduled on September 30, 2021, the US Court ruled on the following: (i) The
Debtor-in-Possession Motion that outlines the terms and conditions of the $505.00 million loan
facility; (ii) RSA motion that covers agreements entered by PAL with its creditors, and (iii) First-
Day Motions with interim authorization. The First-Day Motions are expected to be made final and
will authorize PAL to continue to operate its business and manage its operations as a debtor-in-
possession, without need of securing prior court approval.
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(b) On October 13, 2021, PAL filed the Plan and a Disclosure Statement before the US Court.
(c) On November 12, 2021, the US Court, approved, upon motion of PAL, the Disclosure Statement,
materials and timeline for soliciting votes, and solicitation and voting procedures. Under the voting
procedures, only holders of general unsecured claims are entitled to object or vote on the Plan.
100% of the valid ballots voted in favor of the Plan.
(d) On December 17, 2021, the US Court confirmed the Plan. The Plan calls for the conversion of all
unsecured creditor loans/claims, including a portion of the US$505.0 million working capital
received by PAL from PAL Holdings, Inc. (PHI), to the extent of $255.00 million, into new equity
in PAL. The US Court stated in its order that PAL may take any action free of any restrictions of
the US Bankruptcy Code or Bankruptcy Rules and in all respects as if there were no pending cases
under any chapter or provision of the Bankruptcy Code, except as expressly provided in the Plan.
(e) On December 31, 2021, the Effective Date of the Plan, the conditions of the Plan have been either
satisfied, including the completion by PAL of the debt-to-equity conversion, or waived such that
the Plan was substantially consummated.
(f) In accordance with the terms negotiated with its creditors, within 12 months from effective date of
the Plan, PAL shall facilitate a swap of all shares issued to creditors under the debt-to-equity
conversion with new shares of PHI.
Fleet Size Optimization

Part of the recovery plan is reducing PAL’s fleet size from 91 to 70 by returning 21 surplus aircraft to
lessors. Its Purchase Agreement with Airbus has also been amended to defer the delivery of 13 Airbus
321-231 NEO aircraft from the current schedule of delivery in years 2021 - 2025 to years 2026 - 2029.
The reduction in fleet size and aircraft delivery deferment secures relief with respect to capacity, fleet
cost and liquidity while maintaining profitability.
Application for Increase in Authorized Capital Stock

On September 27, 2021, the PHI’s BOD approved the increase in the PHI’s authorized capital stock
from P=13,500,000,000.00 divided into 13,500,000,000 common shares with par value of = P1.00 per
share to =
P30,000,000,000.00 divided into 30,000,000,000 common shares with a par value of P
=1.00 per
share.
On December 29, 2021, the Parent Company submitted to the Philippine SEC its application for
increase in authorized capital stock. As of date, the approval of the application remains outstanding.
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6760 Ayala Avenue Fax: (632) 8819 0872
Philippines
INDEPENDENT AUDITOR’S REPORT

ON SUPPLEMENTARY SCHEDULES

PAL Holdings, Inc.
8F PNB Financial Center
Pres. Diosdado Macapagal Ave.
We were engaged to audit in accordance with Philippine Standards on Auditing the consolidated financial
statements of PAL Holdings, Inc. as at and for the years ended December 31, 2020 and 2019, and have
re-issued our report thereon dated January 31, 2022. Our audits were made for the purpose of forming an
opinion on the basic financial statements taken as a whole. Such information is the responsibility of the
management of PAL Holdings, Inc. The schedules listed in the Index to Consolidated Financial
Statements and Supplementary Schedules are presented for purposes of complying with the Revised
Securities Regulation Code Rule 68, and are not required part of the basic financial statements. These
schedules have been subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, fairly state, in all material respects, the financial information required to
be set forth therein in relation to the basic financial statements taken as a whole.
Catherine E. Lopez
Partner
January 31, 2022
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PAL HOLDINGS, INC. AND SUBSIDIARIES
Schedule A. Financial Assets
December 31, 2020
Number of Shares Amount Shown Income

Name of Issuing Entity and or Principal Amount of in the Received
Association of Each Issue Bonds and Notes Balance Sheet and Accrued
MacroAsia Corporation 137,280 ₱ 933,504 ₱ -

Golf La Moraleja 2 4,514 -
Medical Doctors, Inc. 10,164 9,557 -
Societe Internationale de Telecommunications (SITA) 30 34,240 -
Tanah Merah Country Club (L corp) 1 5,859 -
Others 78,200 9,523 -
₱ 997,197 ₱ -
See Note 12 of the Notes to Consolidated Financial Statements
150
Schedule B. Amounts Receivable from Directors, Officers and Employees, Related Parties and Principal Stockholders
December 31, 2020
Balance at Additions Amounts Amounts Forex Current Non- Balance at

Name and Designation of Debtor Beg. of Period Collected Written-off Adjustments current End of Period
Various Pilot Trainees - Employees ₱ 28,330 ₱ 1,400 (12,781) ₱ - ₱ - ₱ 16,949 ₱ - ₱ 16,949

Receivable from Various Employees 6,379 12,163 (13,661) - - 4,881 - 4,881
₱ 34,709 ₱ 13,563 (26,442) ₱ - ₱ - ₱ 21,830 ₱ - ₱ 21,830
151
Schedule C. Amounts Receivable from Related Parties which are Eliminated during the Consolidation of Financial Statements
December 31, 2020
Balance at Beg. of Balance at End

Name and Designation of Debtor Net Movement Current Non- current
Period of Period
PAL Holdings, Inc. ₱ 3,600,000 ₱ - ₱ 3,600,000 ₱ - ₱ 3,600,000

Philippine Airlines, Inc. 925,295 4,657,889 5,583,184 - 5,583,184
Zuma Holdings Management Corporation 62,972 - 62,972 - 62,972
Air Philippines Corporation 7,594,661 (1,720,914) 1,459,782 4,413,965 5,873,747
152
Schedule D. Intangible Assets - Other Assets
December 31, 2020
Other Changes
Charged to Cost Charged to Other
Description Beginning Balance Additions of Cost Additions Ending Balance
and Expenses Accounts
(Deductions)
NOT APPLICABLE
``
153
Schedule E. Long-term Obligations
December 31, 2020
Amount Amount
Shown as Shown as
Type of Obligation Current Long-term Total Interest Rates Maturity Dates
Lease liabilities ₱ 96,445,943 ₱ 55,585,964 ₱ 152,031,907 5.3% discounted rate Various dates through 2031
1.89% to 6.58% and
3-month LIBOR plus margin
Long-term debts 23,454,387 9,116,494 32,570,881 1-month LIBOR plus margin Various dates through 2026
₱ 119,900,330 ₱ 64,702,458 ₱ 184,602,788
See Note 15 of the Consolidated Financial Statements.
154
Schedule F. Indebtedness to Related Parties (Long-term Obligations)
December 31, 2020
Balance at Balance at
Name of Related Party Beginning of Period End of Period Remarks
Remarks
NOT APPLICABLE
155
Schedule G. Guarantees of Securities of Other Issuers
December 31, 2020
Name of issuing entity of

Amount owned by person
securities guaranteed by the Title of issue of each class of Total amount guaranteed
for which statement is Nature of guarantee
company for which this securities guaranteed and outstanding
filed
statement is filed
NOT APPLICABLE
156
Schedule H. Capital Stock
December 31, 2020
No. of Shares Reserved Number of Shares Held by

No. of Shares No. of Shares Issued for Options, Warrants,
Title of Issue
Authorized and Outstanding Conversion and Other Related Directors, Officers Others
Rights Parties and Employees
Common Stock 13,500,000,000 11,610,978,242 - 9,308,939,760 2,251 2,302,036,231
See Note 17 of the Notes to Consolidated Financial Statements
157
SUPPLEMENTARY SCHEDULE OF RETAINED EARNINGS
AVAILABLE FOR DIVIDEND DECLARATION (ANNEX 68-D)
FOR THE YEAR ENDED DECEMBER 31, 2020
Deficit, beginning (P
=106,147)
Add net income actually incurred during the year:
Net loss for the year (71,867,802)
Deduct share in net losses of subsidiaries 71,854,389
Net loss actually incurred for the year (13,413)
Deficit, ending (P
=119,560)
158
6760 Ayala Avenue Fax: (632) 8819 0872
Philippines
`1
INDEPENDENT AUDITOR’S REPORT ON

SUPPLEMETARY SCHEDULE ON COMPONENTS OF
FINANCIAL SOUNDNESS INDICATORS

PAL Holdings, Inc.
8th Floor, PNB Financial Center
President Diosdado Macapagal Ave.
We were engaged to audit in accordance with Philippine Standards on Auditing (PSAs) the consolidated
financial statements of PAL Holdings, Inc. (the Company), a subsidiary of Trustmark Holdings
Corporation, and its subsidiaries as at December 31, 2020 and for the year then ended, and have re-issued
our report thereon dated January 31, 2022.The Supplementary Schedule on Components of Financial
Soundness Indicators, including their definitions, formulas, calculation, and their appropriateness or
usefulness to the intended users, are the responsibility of the Company’s management. These financial
soundness indicators are not measures of operating performance defined by Philippine Financial
Reporting Standards (PFRSs) and may not be comparable to similarly titled measures presented by other
companies. This schedule is presented for the purpose of complying with the Revised Securities
Regulation Code Rule 68 issued by the Securities and Exchange Commission, and is not a required part
of the basic financial statements prepared in accordance with PFRSs. The components of these financial
soundness indicators have been traced to the Company’s consolidated financial statements as at
December 31, 2020 and 2019 and for each of the three years in the period ended December 31, 2020 and
no material exceptions were noted.
Catherine E. Lopez
Partner
January 31, 2022
159 *SGVFS162312*
SCHEDULE OF FINANCIAL SOUNDNESS INDICATORS (ANNEX 68-E)
FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019
Ratio Formula Dec-20 Dec-19
Current Ratio Current Assets / Current Liabilities 0.16 0.47
Quick Asset Ratio (Cash and Cash Equivalents + 0.11 0.34

Receivables) / Current Liabilities
Debt-to-Equity Ratio Total Debt* / Total Equity (2.88) 46.54
Asset-to-Equity Ratio Total Assets / Total Equity (3.35) 64.90
Receivable Turnover Revenues /Average Trade 7.64 19.15

Receivables
Number of Days Sales in 365 Days / Receivable Turnover 47.77 19.06

Receivables (General Traffic)
Interest Rate Coverage Ratio EBIT / Interest Expense (5.69) 0.07
Solvency Ratio Net Income (Loss) + Depreciation / (0.24) 0.07

Total Debt*
Profitability Ratios:
Profit Margin Net Income (Loss) / Revenues (1.32) (0.06)
Return on Assets Net Income (Loss) / Total Assets (0.32) (0.03)
Return on Equity Net Income (Loss) / Total Equity (1.07) (1.98)
* Total debt includes notes payable, current portion and noncurrent portion of long-term obligations.
160
CORPORATE ORGANIZATIONAL CHART
AS OF DECEMBER 31, 2020
161
PAL Holdings, Inc.
Sustainability Report 2020
26 -- Governance
Contents
27 Compliance with laws and 32 Data security
regulations 33 Customer privacy
Introduction 28 Effective, accountable, and
transparent governance
03 The Chairman’s message
04 Executive summary
06 About the Company 34 -- Social
14 Company highlights
35 Health and safety
44 Employee training and development
50 Customer management
19 -- About this report 53 Employee hiring and benefits
20 Purpose, Reporting Standards, Scope and Coverage

20 PHI’s Material Topics
54 -- Environment
55 Resource Management
58 Ecosystem and biodiversity
58 Environmental impact
21 -- Economic
22 Direct economic value generated and distributed
25 Outlook 62 – Our people and values
63 Employee welfare and communication
64 Corporate social responsibilities
The Chairman's Message
To our Dear Stakeholders,
The mission of sustainability gained special force in 2020 when PAL We transformed our services to incorporate New Normal
Holdings Inc. faced the greatest challenge in its history, no less than safety protocols that protect our employees and passengers:
the survival of the PAL Group, which includes Philippine Airlines full Personal Protective Equipment (PPE) for our crew; modified
(PAL) and PAL express (PALex), and their transformation into viable meals, amenities, facilities and digital assets to promote
airline businesses for a vastly changed aviation market. healthy travel practices; stronger cleaning and disinfection
measures; and new testing centers that helped authorities
Impact of a Global Pandemic
reopen borders and allow safe increases in travel volumes.
The worldwide spread of COVID-19 shut down aviation markets and
crippled the economies of most nations. PAL and PALex were forced Public Service and Public Accolades
to cancel flights, affecting millions of passengers, wiping out more Our efforts as a responsible flag carrier contributed greatly to
than USD 2 Billion in revenues and placing extreme pressure on the Philippine repatriation drive, with PAL flying majority of the
liquidity. displaced OFWs and other Overseas Filipinos to their homes all
over the country. Our ability to repurpose PAL’s current fleet to
Survival, Recovery and Transformation
serve new cargo business opportunities enabled PAL to
The recovery of PAL and PALex entailed the slow restoration of
transport vital economic shipments and essential medical
routes and flight frequencies and determined efforts to operate
supplies including medicines, PPEs, and life-saving vaccines.
hundreds of repatriation flights and thousands of all-cargo flights to
augment revenues and perform vital public services. The airlines Through it all, PAL won international recognition in 2020 as one
survived through the concerted support of all employees, of the top ten airlines with the highest safety credentials for
stakeholders and partners, generating the necessary funds to shore travel during the pandemic according to Safe Travel Barometer; DR. LUCIO C. TAN
up liquidity, sustain operations and provide the basis for a and as a 4-Star Major Airline by the Association of Airline Chairman and
permanent plan for 2021. Passengers (APEX). PAL and PALex also received the highest 7
stars rating on Safety from AirlineRatings.
Chief Executive Officer
Enduring Commitment to Sustainability
The pandemic demonstrated the depth of our commitment to a The recovery of our airlines further strengthens our resolve to
sustainable business that puts the health and safety of our valued work towards reviving tourism, supporting economic recovery
personnel and customers first. We are reducing the size of our fleet and Filipino livelihoods, and maintaining global links that serve
to align with post-COVID market realities, with priority on younger the public. Service and sustainability shall be the watchwords
and more fuel-efficient aircraft. of a renewed Philippine Airlines and PAL express. 3
Executive Summary
Executive Summary
For close to 80 years, PAL has been on a mission to deliver time of uncertainty and keep an open line of
safe, reliable, efficient and pleasant travel experience communication with the employees. We treat
exceeding passenger expectations. Despite the setbacks in employees with dignity more so at a time when we have
the year 2020, starting with the Taal eruption and ending to let them go as part of a workforce rationalization
with COVID-19, the challenges of which we continue to face program.
head-on, the mission continues.
Our Safety Management System and Quality Assurance
While the pandemic has brutally affected the Company’s Programs go hand-in-hand to ensure that our operations
ability to generate revenues as planned, the Company did are conducted safely in accordance with Aviation wastes and hazardous substances that all contributes to
what it does best - to be of service to the global community, Authority Regulations, PAL Standards, and industry best the deterioration of the global climate landscape.
serving with the heart of the Filipino, a heart that is resilient practices. We address issues on Health and Safety of our
in difficult times. These circumstances has put the business passengers and personnel, especially, at a time of global The events of 2020 have brought fear, anxiety, uncertainty
one challenge after another. Executive Summary

to a test, and we will emerge better, stronger as we surpass threat to our health. With employees as the main
proponents of safety and the provider of service to our
customers, much importance is given by the Company
to a vast number of people, including our employees and
our less fortunate countrymen. Our Company continues to
look into the welfare of the employees and has
In this report, we present the different aspects of the to employee training and development, to ensure that implemented programs to help employees cope with the
Company’s governance, including compliance with laws and employees are equipped in performing services for the various challenges experienced during the year. The
regulations, particularly on labor laws and human rights and safety and satisfaction of our customers. Company has not failed to fulfill its corporate social
how the Company upholds the rights of its most valuable responsibility even in the most difficult times.
assets – its employees. We follow through with labor While we endeavor to recover and slowly resume flights
management and how the Company keeps a harmonious to a normal level, we do not forget our responsibility to Sustainability is also defined as the ability to exist
relationship between management and its workforce. Part help mitigate the effects of our operation to climate continually. Despite the odds, the Company did show 2020
of keeping a strong relationship between management and change. The Company is conscious of the energy it such ability. We will continue to exist so that we may
the employees is maintaining respect and giving consumes and is committed to becoming more efficient continue to deliver safe, reliable, efficient and pleasant
opportunities to a diverse group of individuals that make up in the usage of non-renewable energy, limiting travel experience exceeding passenger expectations…and
the workforce. We demonstrate transparency especially at a greenhouse gas emissions as well as reducing solid serve as a Bridge of Hope to our countrymen.
5
About the Company
About PAL Holdings, Inc.
PAL Holdings, Inc. (the Parent Company or PHI) was incorporated in the Philippines on May 10, 1930 to
engage in the business of a holding company. On October 5, 1979, the Philippine Securities and Exchange
Commission (SEC) granted PHI an extension of its corporate life for another 50 years from May 1980. PHI is
a subsidiary of Trustmark Holdings Corporation, a domestic corporation and is part of the Lucio Tan Group
of Companies.
The Parent Company and its subsidiaries are primarily engaged in air transport of passengers and cargo
within the Philippines as well as between the Philippines and several international destinations. The Group
operates through its major subsidiaries: Philippine Airlines, Inc., the Philippine national flag carrier; and Air
Philippines Corporation, a subsidiary under common control that was indirectly acquired through Zuma
Holdings Management Corporation in 2017.
PHI's registered office address is at 8th Floor, PNB Financial Center, President Diosdado Macapagal Ave.,
CCP Complex, Pasay City, Metro Manila
7
Philippine Airlines, Inc. (PAL)
Pioneering in end-to-end airline operations that constitute an industry of its own, Philippine Airlines, Inc.
(PAL) lives on with its original name and the national colors, shining through for eight decades. PAL stemmed
from the Philippine Aerial Taxi Company established in 1931 by co-founder Andres Soriano, who shut it down in
1939 and replaced it with Philippine Air Lines two years later. Braving the imminence of war, PAL had its inaugural
flight with only five passengers from Makati to Baguio on March 15, 1941.
A private entity for much of its existence, PAL was brought under government ownership in the 1970s and
1980s, reverting to private hands in the early 1990s. Today, PAL is the only privately-owned major flag carrier in
Southeast Asia. Its Chairman and CEO, Dr. Lucio C. Tan, is PAL's longest-serving chief executive.
Through the years, designated as the "national flag carrier" by R.A. 2232, PAL has been recognized to play a central
role in boosting the growth of the Philippine economy and the emergence of a nation-wide tourism industry.
Today, PAL is the Philippines' largest international airline and the only full-service Filipino air carrier offering
Business Class, Premium Economy and Regular Economy services. Its fleet consists of modern high-technology
aircraft such as the Boeing 777 along with the Airbus A350 and A330 for long-haul routes and the
A320/A321 family for regional and domestic routes.
PAL's network stretches across the world. The flag carrier operates
from four hub airports (Manila, Cebu, Clark and Davao) in the
Philippines to an inclusive total of 25 domestic destinations and 28
points in Asia, Australia/Oceania, the Middle East, Europe
and North America. PAL operates the country's only direct air links
to mainland U.S.A., Hawaii, Canada, New Zealand and Western Europe,
Japan and Australia.
8
Memberships & Affiliations
Through the years, PAL had the privilege of flying Philippine presidents on most of their state visits. A multitude of
beauty queens, celebrities and other VIPs also availed PAL's services.
During calamities and times of urgent public need, PAL has engaged in relief services by flying home Filipino evacuees
from crisis-torn countries in the Middle East, Africa and elsewhere, while providing critical services to communities in
need after typhoons and other natural disasters.
Even with the crippling effects of COVID-19, PAL continued to fulfill its mission as a flag carrier by mounting cargo
charter flights to and from various international points and within our country to load food, medicine, medical
equipment and other essential commodities on our aircraft, by helping the OWWA, DFA and cruise ship
companies bring home stranded Filipinos from around the region, Milan, the Maldives, Qatar and Middle East, as
well as helping the DOT and foreign embassies repatriate their nationals who were stranded in different provinces
and bring them to their home countries.
As the nation continues its fight against COVID-19, PAL is working hand-in-hand with the government and the
private sector to transport vital vaccines to key cities across the archipelago.
PAL celebrates it’s 80th year Anniversary on March 15, 2021. PAL
celebrates this milestone despite all the challenges brought about by
the pandemic. While times are difficult and the road to recovery is
not a smooth one, PAL will not back down, but will spread its wings
and continue to shine on!
9
80 Years of Heartfelt Service
Known to be the oldest Airline in Asia, alongside the pioneer for the first Skybeds available in our Boeing 747 “Queen of the Skies”, PAL
has carried through innovations and firsts around the airline world.
First Asian airline First airline to First Asian airline First to have
First South East
First Airline be honored by
to cross the Pacific Asian airline to fly
Les Chaines de
to fly to China B747-200 with
in Asia (1941) (1946) to Europe (1947) (1979)
Rotisseurs (1979) Skybeds (1980)
First to have a First to show First to accept First to launch First Philippine
Skytrax 4-star rating Nationwide crowd- BancNet ATM cards PAL Mobile App carrier to be
in the Philippines sourced inflight as form of payment in the Philippines IOSA-certified (2006)
(2018) safety video (2017) online (2009) (2009)
Change of Hands Over the Years

June 1999 April 2012
September 1948 January 1992
PAL is placed under a San Miguel Corporation
Government became PAL was privatized
10-year rehabilitation takes management
the majority stockholder through PR Holdings
program control of PAL
February 1941 January 1965 September 1998 October 2007 October 2014
Philippine Airlines Government relinquished Asian financial crisis led to PAL exits from Lucio Tan Group
was established as a control over PAL, only to suspension of operations, receivership two years reassumes management
private company be reassumed in 1977 but reassumed two ahead of the 10-year plan control of PAL
weeks after
10
Memberships & Affiliations
PAL express (PALex)
Air Philippines Corporation, currently doing business under the name and style of Philippine Airlines or PAL
express (PALex), was incorporated in the Philippines on February 8, 1995 while commercial operation began on
February 1, 1996.
It is the 3rd biggest airline in the country operating Airbus A321-200s, A320-200s, and De Havilland DASH 8-400s
and DASH 8-300s. It was in 1999 when the Lucio Tan Group of Companies took over management of PALex. The
Lucio Tan Group of Companies’ entry into picture resulted into a big improvement in the Company as it allowed
PALex to continue to provide low-cost air travel to the riding public.
The increase in routes and passenger sales allowed PALex to significantly increase its partnership with Philippine
Airlines, including the merging of timetables and ticket sales. The strong relationship with the country’s flag
carrier also allowed PALex to move into the PAL terminal at the Ninoy Aquino International Airport. PALex was
known for its safety, professionalism and first-class service.
PALex is the 2nd Philippine carrier that was included in the IATA Operational Safety Audit Registry in 2014.
The airline was also certified by SGS last December 2018 on the ISO 9001:2015 Quality Management System.
This certification is renewed annually.
11
PAL express (PALex) (cont'd)
August 1997
R.A. 8339 was enacted
December 1995 APC’s 25-year franchise to February 2018 December 2018
Issuance of an Air Carrier establish, operate and PAL express / Philippine APC/PAL express was
Operating Certificate by maintain domestic & Airlines was awarded the certified ISO 9001:2015
the Air Transportation international air transport 4-Star Airline Ratings by Quality Management
Office (ATO) services Skytrax System (QMS)
February 1995 February 1996 March 2018

April 2008
Air Philippines APC first commercial flight PAL express renewed IATA
Under Dr. Lucio C. Tan’s
Corporation (APC) from Manila (T4) to Operational Safety Audit
leadership, APC was
Incorporation Zamboanga City or IOSA
rebranded as PAL express
12
Our Vision, Mission, and Core Values
Vision
• To be the airline of choice in all markets we serve
• To be a source of pride for Filipinos everywhere
Mission
• To deliver safe, reliable, efficient and pleasant travel experience exceeding passenger
expectations
• To provide a satisfying career to our employees and adequate returns to stockholders
• To represent the Best of the Philippines, the Best of Filipino to the world
Core Values
• We grow a successful and empowered team
• We act with passion and aim for excellence
• We embrace and drive change
• We put our customers first
• We exemplify the Best of the Filipino spirit
Our Promise - Buong Pusong Alaga

Our signature Buong-Pusong Alaga (wholehearted service) is our unwavering promise to every
traveler. More than ever, we are dedicated to giving above-and-beyond service in each flight. With
rigorous training programs and leadership empowerment workshops, our partners and crew
members always ensure each passenger feels the Heart of the Filipino.
To deliver our Service Aspiration of a Heartwarming Filipino Travel Experience, we created
stronger employee engagement and front liner service training programs. Through these training
programs, our front liners learn five service attributes that guide our behavior:
Magaling (Efficient and Skillful)
Maaasahan (Reliable and Trusted)
Maalaga (Caring and Hospitable)
Magalang (Polite)
Malambing (Affectionate)
Our Front liners continue to exhibit these attributes in their daily interactions to build stronger
ties with customers and to endear us to many.
13
Company Highlights
Our Fleet (as of December 31, 2020)
Philippine Airlines Fleet Size: Average Age: PAL express Fleet Size: Average Age:
60 5.6 years 37 8.6 years
10 B777-300ER 6 A350-900 15 A330-300 6 A321 NEO 12 A320-200
18 A321 CEO 6 A321 NEO SR 2 A321 NEO XR 3 A320-200 15 Dash 8-400 4 Dash 8-300
15
INTERNATIONAL Route Network
28 Destinations, 30 Routes
North America + Guam Middle East Australasia
Honolulu Dammam Melbourne

Los Angeles Doha Port Moresby
San Francisco Codeshare Partnerships:
Riyadh Auckland
Vancouver
Guam Dubai * *
Toronto Southeast Asia
* *
New York Japan Bangkok
Kansai
*
Europe Jakarta
London Nagoya Hanoi * *
Greater China
Narita Kuala Lumpur * *
Hongkong Fukuoka Ho Chi Minh
* PAL is the operating carrier
Taipei Haneda Singapore
16
DOMESTIC Route Network
25 Destinations, 34 Routes From Cebu
From Manila Butuan Davao Tagbilaran
Bacolod Davao Legaspi Cagayan de Oro Dipolog Zamboanga
Basco Dipolog Naga Iloilo
Butuan Dumaguete Ozamis

From Davao
Cagayan de Oro General Santos Pagadian
Catarman Iloilo Puerto Princesa Iloilo Tagbilaran Clark
Caticlan Kalibo Tacloban Cebu
Cebu Laoag Roxas
Cotabato Zamboanga
17
Awards and Recognition Our Safety Protocols Against COVID-19:
Provides Personal Protective Equipment for
cabin crew use throughout the flight
Carries out disinfection of aircraft surfaces

after every flight using high-grade eco-friendly
cleaning agents
Uses High Efficiency Particulate Air (HEPA)

filters to cleanse cabin air of bacteria, viruses,
and impurities with 99.99% efficacy
Carries out simplified inflight food service to

minimize contact between cabin crew and
Top 10 Safest Carriers 7-Star Safety Rating 4-Star Major Airline passengers
Mandates the use of face masks and shields

PAL Group was recognized PAL Group has received PAL has received the 4- among all travelers and airline workers
as one of the top 10 the highest star rating on Star Major Airline 2020
airlines with the highest Safety, which is 7 stars rating from Airline Ensures availability of hand sanitizers at pre-
safety credentials for from AirlineRatings. Passenger Experience flight facilities, flight proper and post-flight.
travel response to the Association (APEX)
COVID-19 pandemic by Official Airline Ratings. Thermal scans and footbaths are also observed
at every entrance of pre-flight facilities.
Safe Travel Barometer. These ratings were based
Securing 4.2 rating out of on independently
verified, validated and Conduct COVID-19 screening and assist in the
5.0 as the highest.
testing of passengers as required by the local
certified airline passenger and international health authorities.
ratings after flights.
About This Our People and

Introduction Economic Governance Social Environment
Report Values
18
About this Report
About This Report
PURPOSE SCOPE AND COVERAGE
The PAL Holdings, Inc. has published this Sustainability Report 2020 to provide This Report details Philippine Airlines and PAL express accomplishments and various
prompt and transparent disclosure about business, activity outcomes and data in the economic, environmental, social and governance aspects for the year 2020
major sustainable management performances for the year in order to earn (January 1st to December 31st, 2020). Financial information is mainly obtained from the
long-term trust from its stakeholders and achieve sustainable growth that latest audited financial statements.
benefits society.
PHI’S MATERIAL TOPICS
REPORTING STANDARD Our material topics were identified based on the impact of our organization, as well as
This report was prepared in accordance with the Securities & Exchange the substantive influence on the assessment and decision of our stakeholders. It is
Commission (SEC) guidelines. The GRI Standard issued by the Global Reporting further supported by our Board of Directors, Executives, and Sustainability Committee.
Initiative (GRI) was used as reference for Economic, Environment, Social, & The assessment identifies and evaluates the sustainability issues that mattered most to
Governance (EESG) information. This report has also been aligned with the our businesses and our stakeholders.
United Nations (UN) Sustainable Development Goals (SDGs) in line with the
Group’s commitment in answering the call to action to end poverty, protect the
planet and ensure that all people enjoy peace and prosperity by 2030. Sustainability Topics
Economic Environment Social Governance
Direct Economic Energy Efficiency Employee Training Compliance with
Value Generated and Development Laws & Regulations
& Distributed Greenhouse Gas
Emission Employee Hiring & Effective,
Benefits Accountable, and
Transparent
Data Security & Governance
Privacy
FEEDBACK Health and Safety

We enjoin our stakeholders to send their feedback regarding matters in this
Sustainability Report via email to PHI_SR@pal.com.ph. Customer
Satisfaction

Report Values
20
Economic
Direct Economic Value Generated and Distributed
OPERATIONAL STATISTICS 2020 2019 The airline embarked on several cash conservation and cost containment efforts,
Number of Roundtrips 19,900 61,396 raising additional funds from shareholders, and sale of noncore assets.
Revenue Hours 116,209 343,256
To control expenses, the airline employed cost reduction measures which consisted of
Number of Passengers 3,850,919 16,761,050
executive pay cuts and 50% leave without pay for all employees every month since
Revenue Passenger Kilometer (000) 11,873,983 42,329,104
April 2020, reductions in staffing with skeletal operations, and elimination of almost all
Available Seat Kilometer (000) 20,918,807 55,308,139
marketing and discretionary expenditures. The Group also embarked on a major
Passenger Load Factor 56.76% 76.50%
workforce rationalization program across all departments.
Freight Ton Kilometer (000) 350,758 676,956
Revenue Ton Kilometer (000) 1,510,508 4,631,557 Despite the limited revenue generated, the proactive, bold and dynamic measures
Available Ton Kilometer (000) 1,884,173 7,626,934 adopted by the Management enabled the Company to withstand the crisis and pay
Revenue Kilometers (Distance Flown) 76,094,740 214,669,083 the employees’ salaries, operating expenses, critical suppliers and lessors and remit
taxes to the government. The Group sustained the financial needs of its thousands of
The year 2020 started with seemingly big surprises: the Taal Volcano eruption and the workers, cash flowed into the coffers of our suppliers, and contributed to the local
dreadful COVID-19 pandemic. As with all airlines in the world, the PAL Group has been economy. The Company has always been transparent in its dealings with stakeholders,
facing COVID-19’s devastating impact on demand and liquidity. With the imposition of providing regular updates about the Company’s situation and plans, thus gaining the
Enhanced Community Quarantine in Manila, PAL Group’s main hub, and travel support of everyone in its quest to recovery.
restrictions around the world, the Group had no choice but to suspend regular
commercial flights and operate some Cargo only flights carrying essential products, and DIRECT ECONOMIC VALUE ITEM AMOUNT
repatriation and sweeper flights. With very limited operations, the Group suffered Direct Economic Value Generated (Revenue) Php 55.3 Billion
tremendous decline in revenues, which only amounted to PHP 55.3 Billion in 2020. Direct Economic Value Distributed:
a. Operating Costs Php 71.5 Billion
The reduced operations affected liquidity as little cash were being generated, payables
b. Employee Wages & Benefits Php 8.2 Billion
were falling due, ticket refunds were an all time high due to numerous cancellations
c. Payment to Suppliers, other operating costs Php 7.1 Billion
brought about by travel restrictions. The liquidity problem caused the Company to take
d. Interest payments to loan providers Php 9.8 Billion
drastic measures affecting shareholders, the employees, industry partners, lessors and
lenders. e. Taxes given to government Php 604 Million
f. Investments to community (e.g. donations, CSR) Non-Cash Donations

Report Values
22
PAL CELEBRATES 80TH BIRTHDAY WITH DAWN MASS
AT MANILA AIRPORT
On March 15, 2021, Philippine Airlines welcomed the flag carrier's 80th
anniversary at the break of dawn with an open air eucharistic celebration led by
Fr. Jose Winston Margate at the NAIA Terminal 2 grounds.
In his anniversary remarks, PAL President and COO Gilbert Santa Maria assured
the flying public of the airline’s staunch commitment to service as the PAL team
continues to work towards the recovery of the airline and the tourism and
travel sector that is a vital component of the Philippine economy.
"Our message to our country and the world: Buhay pa tayo. Andito pa tayo. At
hindi tayo aalis. (PAL is alive, we’re still here, and we’re here to stay.) This great
lady - Philippine Airlines - will stay aloft while she is in our care," said Mr. Santa
Maria.
The mass and simple ceremony, with a backdrop of PAL aircraft on the tarmac,
welcomed the brand new day as symbol of the airline’s renewal amid the
pandemic. As the PAL President pointed out, "It's nice to see the sun light up
the sky and the flag that has been an indelible part of our fleet for eight
decades."
Despite great challenges, 'Asia's First' is still the airline with a lot of heart. No
less than 310,000 of 420,000 displaced Overseas Filipinos came home via PAL
from March 2020 up to the present. Within the same period, tens of thousands
of foreign nationals flew back to their home countries via PAL. At present,
vaccines are being airlifted on PAL and PALex’s fleet around the Philippines, as
part of the national effort to keep our country safe.
Mr. Santa Maria cited divine intervention and divine inspiration as blessings
that enabled the airlines’ continued survival, along with the support of PAL and
PALex’s partners and stakeholders and the intense efforts and dedication of the
Group’s personnel. "We must remain bold and fearless. We will continue to
work to earn PAL and PALex's future."
To cap his message, the PAL President read the Knights Templar motto: "Non
nobis, Domine, non nobis, sed Nomini tuo da gloriam (Not for us, My Lord, not
for us, but to your Name give the glory)."
23
The Mission Continues…
#FlySafePH
As the government rolls out its vaccine program to inoculate at
least 70 million Filipinos across the nation, the PAL Group The Vaccine Airlift Continues :
prepared for the carriage of the vaccines. A Working Group The Group flies vital vaccines to Legaspi, Cagayan de
was created, trainings were provided to about 800 personnel Oro, Cotabato, Bacolod, Tagbilaran, Iloilo, Butuan,
nationwide, cold chain facilities were prepared, several dry Davao, Cebu and other cities in the Philippines.
runs were conducted and close coordination with the
government agencies and cargo forwarders were conducted to
ensure the safe carriage of the vaccines.
The Group has multiple options of aircraft across its fleet from
ultra-long haul wide body to narrow body and turboprop that
can be used for the carriage of the vaccine across the country. Philippine President Rodrigo Duterte, Chinese Envoy to the
Philippines Huang Xilian, Vaccine Czar Carlito Galvez, Senator
PAL is the only airline in the Philippines with the ultra long-
Christopher 'Bong' Go and Health Secretary Francisco Duque
haul, wide body aircraft that can carry large quantities of give their thumbs up to the arrival of 1M doses of vaccines
vaccine from continental sources in Europe and the US and flown via the A330 aircraft of PAL on March 29, 2020
bring them directly to major cities in the country.
On March 24, 2021, PAL picked-up 400,000 doses of Sinovac

vaccines from Beijing, China to Manila using a B777 aircraft.
This special mission makes PAL as the first local carrier to bring
home the much-needed vaccines for the country. The flight
was welcomed by Senator Christopher Go, Health Secretary
Francisco Duque, Inter-Agency Task Force on Emerging
Infectious Diseases (IATF) Vaccine Czar Gen. Carlito Galvez Jr.,
PAL President and COO, Mr. Gilbert Santa Maria and other
government officials.
PAL’s President and COO Mr. Gilbert Santa Maria joins the
On March 29, 2021, Philippine President Rodrigo Duterte team that spearheaded the safe carriage of the vaccines. Vaccine Transport in Service for the Nation
together with Chinese envoy to the Philippines Huang Xilian
and other government officials welcomed the arrival of 1 The Group is honored to take part in this historic step towards healing and recovery of the Filipino nation and is
million doses of vaccine from Beijing, China loaded in the PAL committed to support the government’s initiative to safely distribute the vaccines all over the Philippines.
A330 aircraft.
24
Outlook
While COVID-19 continue to devastate the world, it opened a new opportunity for PAL
BRIDGE OF HOPE
Group. An opportunity to revisit our business model, develop a new plan, rationalize our
fleet, create a lean organizational structure, simplify processes and maximize use of
digitalization.
Data analysis will be at the forefront to better understand the need of our passengers who
remain loyal with the Company through its ups and downs. Aspiring passengers will be
captured through innovative service offerings and new markets will be explored to PAL’s network builds air
maximize aircraft utilization.
bridges for our many islands.
The Group is a vital agent in the Philippine economy. We are the global link of the country
to the world. We will continue to serve the country with our repatriation flights bringing To let goods and people flow.
home Filipinos and carrying special cargo of essential supplies, food, medicines and most To give hope and support
specially, the vital COVID-19 vaccines into and across the archipelagoes, as our
contribution to the rebuilding of our nation. to Filipino businesses.
The Group will continue to work with the government and the travel industry to
continuously enhance the safe travel program that will allow commercial travel to support
the Philippine economy. So that our economy
Even in the midst of the pandemic, the Group’s market share remains strong despite tough will hum again.
competition for a market that substantially shrunk. Revenge travel is expected once a
good percentage of the people have undergone vaccination.
PAL Group remain steadfast in the midst of the COVID-19 challenges. Our people shine
with teamwork, cooperation, support, perseverance as they work together, harder and
closer to keep the Company afloat in this dark and difficult time.
The Management is cohesive, focused, equipped and determined to steer the Company
towards recovery. The plan is in place, the lessors and lenders are supportive, and the
Management is dedicated to bring the airlines to a new and brighter tomorrow.
With the unwavering support of its owners and shareholders, PAL Group will emerge
stronger, healthier, resilient , more competitive and will be the Bridge of Hope towards
nation building.
25
Governance
Compliance with Laws & Regulations
The Group complies with the local and international laws and Workplace Conditions, Labor Standards, and Human Rights – Labor Laws and Human Rights
regulations. The airline industry is highly regulated, and the Group is The Company supports and respects the Universal Declaration of Human
governed by the Philippine Government through the Civil Rights, the core conventions of the International Labor Organization and
Aeronautics Board with regards to new routes, tariffs, schedules and labor laws in the conduct of its business as well as in its good labor
passenger rights and through the Civil Aviation Authority of the relations with its employees and contractors.
Philippines for aircraft and operating standards. PAL also conforms
The employees, suppliers and the entire organization benefit from the
to the standards and requirements set by different foreign civil
Company's compliance with human rights and labor laws.
aviation authorities of countries where the airline operates.
Non-compliance with human rights and labor laws could expose the Company to penalties.
PAL and PALex also ensures compliance to labor laws which protects
In addition, it may adversely affect the employees' job performance, which ultimately affects
the rights of our personnel, as well compliance to environmental
the Company's sustainability.
laws that protect the environment.
The Group’s policies and programs are always consistent with international standards and
Environmental Compliance
norms found in the Universal Declaration of Human Rights and the core conventions of the
Amid the COVID-19 pandemic, the PAL Group continues its International Labor Organization. The Company recognize the rights of its employees to
compliance to environmental laws required by Department of organize, to collective bargaining and to collective action. It allows legitimate activities of
Natural Resources- Environmental Management Bureau, National registered labor unions.
Water Resources Board, Laguna Lake Development Authority and
The Group continuously review its policies and programs to ensure compliance with human
Civil Aviation Authority of the Philippines.*
rights principles and labor laws.
DISCLOSURE QUANTITY UNITS DISCLOSURE QUANTITY
Total amount of monetary fines for non- No. of legal actions or employee grievances involving forced or child labor None
compliance with environmental laws and/or 0 PHP Do you have policies for the following topics that explicitly disallows violations of labor laws and
regulations human rights (e.g. harassment, bullying)in the workplace?
No. of non-monetary sanctions for non- Forced Labor and Child Labor Yes
compliance with environmental laws and/or 0 # Human Rights Yes
regulations
No. of cases resolved through dispute
0 #
resolution mechanism
*For more information about Environment, please refer to page 54

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27
Effective, Accountable, and Transparent Governance
The Group is committed to conducting its business in an honest and ethical Whistle Blower: The Group maintains its Whistleblower Program and all stakeholders
manner. The Group’s directors, officers, consultants and employees (“Covered are encouraged to come forward and disclose any and all actual or perceived
Persons”) are expected and required to conduct their dealings with the highest wrongdoing, malpractice or risk involving the Group. Reports may be made through
ethical standards. email add ethicshotline@pal.com.ph, mobile number 09175088942 or 83510454.
The Group has adopted guidelines on the following issues. Conflict of Interest: Covered Persons who have personal or pecuniary interest on any
enterprise with which the Group has an existing or intended transaction are required to
Compliance with Laws and Regulations: Covered Persons are to conduct business disclose the relevant facts of the situation to the Chairman of the Board, in the case of
in full compliance with all applicable laws and regulations. Any suspected criminal the directors; and to the President and Chief Operating Officer (COO), and the Group
violations will be reported to appropriate authorities. Non-criminal offenses will be Head and Department Heads, in the case of employees.
investigated and addressed as appropriate.
Related Party Transactions: The Group has in place a related party transactions
Anti-Corruption: A strong and transparent policy on anti-corruption reduces the policy to ensure that all related party transactions of the Group are at arm’s length, the
exposure of the Group to fines, penalties, and legal liabilities, reduces the cost of terms are fair, and they will inure to the best interest of the Group and its stakeholders.
operations, reduces the cost of capital, and reduces the risk of contracts becoming
void. Adherence to anti-corruption policies thereby protects the Group’s
reputation and allows sustainable growth.
Rules on Gifts: Covered Persons are prohibited from accepting gifts or invitations
of any form from any supplier, customer, or business partner, or from any third
person or entity save in exceptional circumstances that are within the bounds of
ethical behavior.

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28
Labor - Management Relations
PAL recognizes two local labor unions: Philippine Airlines Employees’ Association serve the interests of both the employees and the Company. It can lead to mass
(PALEA) for the rank and file ground employees and Flight Attendants’ and actions which affect the delivery of services to the customers. Consequently, the
Stewards’ Association of the Philippines (FASAP) for the cabin crew. In addition, it day-to-day and strategic concerns of the business are affected. An effective labor
also recognizes foreign labor unions in the United States, Singapore and Japan. The management relationship is fundamental to achieving a productive labor
Company complies with the existing Labor Law, Collective Bargaining Agreements environment.
and Company policies and procedures. Since the declaration of pandemic, the Management has conducted monthly virtual
townhall meetings with the different group of employees nationwide and in the
The Company believes and exerts all efforts to maintain a harmonious labor international stations. Update on the status and plans of the companies were
management relationship. Dialogues to discuss and clarify certain concerns of provided and the employees were encouraged to raise questions or any concerns.
employees are conducted regularly to ensure a positive work environment. It is
management's way of showing that it values its employees. A valued employee Surveys were also conducted after every townhall meeting to offer further
opportunities for employees to voice their views and concerns to promote
increases efficiency which leads to higher productivity.
continuous improvement in the employee-management relationship.
The Human Capital Department leads the regular communication with the various The openness and transparency adopted by the Management has earned the trust,
unions. We sit down in the union negotiations scheduled by both parties to discuss understanding and support of the employees leading a harmonious and peaceful
and arrive at agreements that are amenable and beneficial to both labor and workforce rationalization program.
management. PAL ensures the timely conclusion of different Collective Bargaining
QUANTITY
Agreements (CBAs) to achieve sound and lasting industrial peace. DISCLOSURE UNITS
PAL PALex
Though PALex does not have a union, they have Employee-Management % of employees covered with Collective
Cooperation and Collaboration (E=MC2), that serves as a venue to meet and discuss 55% N/A* %
Bargaining Agreements
employees’ concerns with the management openly. Number of consultations conducted with
A respectful and collaborative relationship between labor and management should employees concerning employee-related 35 5 #
policies
be maintained. Otherwise, the parties become adversaries rather than partners in
*PALex does not have an employee union but organized an Employee-Management
industry. An antagonistic relationship between labor and management does not
Cooperation and Collaboration Group.

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29
Workforce Rationalization Program The affected employees continued to
The losses sustained by the Group in 2019, aggravated by the Taal Volcano eruption receive their salaries and medical benefits
in January 2020 which resulted to the cancellation of nearly 100 domestic and until the effective date of separation.
international flights and the start of COVID-19 virus has led to the 1st workforce Several programs were put in place to
rationalization in February 2020. It affected around 300 employees. All of them support the employees which include
received appropriate separation benefits, additional trip pass privileges, and outplacement assistance and
assistance in the form of career counseling and outplacement support. employability initiatives to help ease the
On March 11, 2020 , the situation was further exacerbated when the World Health transition. Outplacement and
Organization (WHO) declared the COVID-19 outbreak as a pandemic. On March 16, employability webinars were organized
2020, the country was placed in a State of Calamity halting land, sea and air travel and partnership with several companies
except repatriation and cargo flights. were made to assist the outgoing
employees.
Despite the gradual opening of the airports months after, the massive financial
impact to the Group has led to the implementation of several measures to contain
the impact to the Company and the employees such as reduction in pay for the
executives, temporary furlough and flexible working arrangements to hold off job
cuts as long as possible and ensure that its employees continued to receive salaries The exit process was carefully planned to ensure a
and benefits, particularly medical benefits, during the height of the pandemic. smooth transition both for the employees and the
company. Safety protocols were put in place for the
Frequent communication with employees through Townhall meetings every month protection of both the outgoing and attending
kept the employees updated on the status of the Company. employees. Sufficient notice were given to the
In October 2020, the Company was left without any option but to implement a 2nd employees, the separation package was in accordance
round of workforce rationalization program. This company-wide workforce with the requirement of the Law, Collective Bargaining
rationalization program covering about 2,300 employees, approximately 30% of the and Agreement and Company policies.
airline’s workforce was implemented in March 2021. An inspector of Department of Labor and Employment
The rationalization was carried out after a comprehensive system-wide review observed the exit process and provided positive
process and is part of the Company’s overall recovery initiatives amid the ongoing comments.
pandemic that has massively affected the global airline industry. Separated employees also provided positive comments.

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30
Diversity and Equal Opportunity Our employees' diversity have created the work Our internal personnel policies and procedures are anchored
The Company complies with the Philippine laws that culture that puts a premium on the corporate values to the Philippine laws that promote equal opportunity and
promotes diversity and equal opportunity to aspiring that we promote which is the Buong Pusong Alaga non-discrimination to those who aspire to work with the
applicants and existing employees of the (Whole-hearted Service). We value respect and organization as well as those who are already within.
organization. Some of these laws are Republic Act No. exhibit cooperation and unity despite diversity. Personnel policies are readily available in the intranet,
MyPALNet.
6725, An Act Strengthening the Prohibition on Ultimately, the entire organization benefits from the
Discrimination against Women; and Republic Act No. culture of diversity and equality in our workplace,
10911, An Act Prohibiting Discrimination Against Any because this then enables the organization to handle
Individual in Employment on Account of Age. different types of customers.
Being in a country with diverse cultures, our We adhere to the Philippine Labor Laws as non-
workforce emanates from different regions, cities and compliance puts us at risk on incurring penalties,
municipalities across the Philippine archipelago. potential legal action and negative public impression.
Through our ticket offices in the provinces, we are
able to strengthen and empower our small hubs to Workplace diversity allows inclusion regardless of our
bring out the desired experience of our passengers cultural background, gender, ethnicity, personality,
and stakeholders. age, and education. Our differences are key to
broaden our diverse teams' experiences and 'In flying, there's no gender’:
Being the flag carrier, the Group receives applications knowledge. PAL's female pilots on historic first all-female flight crew, led
from people of different gender, race, culture, by Capt. Yvonne Sunga, with First Officer May Marie Segovia
Our Human Capital Department immediately updates
economic background, or religious affinity. Applicants and Second Officer Marie Rose Ison Maximo
our internal policies whenever a government law
to our vacant positions are ensured of going through EMPLOYEE CLASSIFICATION % TO TOTAL
relating to diversity and equal opportunity is passed.
fair hiring process taking into consideration the BY GENDER 2019 2020
specific skills and competencies required of the job. Male 50.53% 50.13%
Female 49.47% 49.87%
EMPLOYEES FROM VULNERABLE SECTOR NUMBER
Persons with Disability 17
Solo Parent 27

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31
Data Security
With passenger air transport as the Group’s primary business, handling of sensitive While the Company have implemented measures to ensure that Company information
Company, employee and passenger information are of utmost importance. These are secured, the airline recognizes that perpetrators, fraudsters and hackers become
information are collected in the Ticket Office, Sales and Reservation, IT Service Office, more and more creative, and therefore there is a need to keep up and be several steps
Contact Center, Data Center, and across all offices of the Group. The IT Department is ahead in terms of data security. As such, increasing data protection will continue to be
the primary computer processor serving PAL Group. Data is processed and stored by IT pursued.
solutions being used by all personnel across PAL and PALex. Security Awareness Campaigns within the Company are being implemented to educate
Significant amounts of sensitive and valuable data must be protected against data loss employees on cybersecurity. This is a continuing program given to employees so that
or data theft, which may fall into the hands of unscrupulous individuals or entities attempts to data breaches are easily spotted and reported.
through system breach or malware attacks. Should an event occur, various The Company has had its share of malware and phishing incidents over the years, but
stakeholders, consisting of passengers, employees, suppliers, vendors, and service these phishing and malware incidents did not result to privacy breaches. The incidents
providers are affected. An attack on the system may lead to system unavailability and for both phishing and malware were all blocked by our security systems. No damage or
put a halt on operation. harm was experienced against PAL and our customers.
An Information Security Manual is in place to provide guidelines and standards for The Group continue to seek improvements in handling incidents that are related to
employees’ behavior with regard to the security of the Group’s data, assets, IT information security.
systems, etc. The Information Security policy defines the who, what, and why
regarding the desired behavior, and they play an important role for the Group’s TYPE OF INCIDENTS / NUMBER OF IINCIDENTS / OCCURENCES
overall data security posture. OCCURRENCES Year 2019 Year 2020
The Cybersecurity Operations Center has been established to monitor, respond and Reported Phishing Incidents 440 472
remediate cybersecurity threats affecting computing resources in the Group’s network. Malware Occurrences 23,150 1,004

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32
Customer Privacy
PAL collects and processes personal information of its customers and passengers To ensure compliance with data protection laws and to promote a culture of privacy, the
necessary in order to provide transportation and cargo services. As such, the following policies and procedures have been developed and implemented:
Company must assure and commit to consumers that all information they provide
• Privacy Policy
to PAL Group is handled and processed in accordance with the law and will not be
disclosed for any other purpose than that stated by the Company upon collection. • Privacy Management Program
• Privacy Handout
The stakeholders affected are the passengers and customers who avail of the • Privacy Breach Response Procedure
Company’s services; employees with direct interaction with customers
• Data Privacy Complaint and Request Handling Procedure
particularly those in the Contact Center, Ticket Offices, and Airport; service
providers that process customer information; government bodies that require Opportunities for improvement include enhancement of Information Systems to further
protect customers' personal information, regular updating of privacy policies and
receipt of information of customers such as the Bureau of Immigration, Bureau procedures, and further promotion of culture of privacy within the organization.
of Customs, and recently the Department of Health.
The Group ensures that policies and procedures are in place to protect the
personal information that are collected and processed. The Group recognizes QUANTITY
that unlawful processing of customers' personal information will result in DISCLOSURE
IN 2019 AND 2020
violation of applicable data protection laws. An event of breach or cyberattacks No. of substantiated complaints on customer privacy* 0
resulting to leak of customer data can hamper business operations and destroy No. of complaints addressed 0
the reputation of the Company. These events can also lead to fines, penalties No. of customers, users and account holders whose information is
and potential compensation to data subjects affected. 0
used for secondary purposes
As PAL engages service providers to assist in its business operations, it is likewise *Substantiated complaints include complaints from customers that went through the
essential for the Company to ensure that its service providers operate in organization’s formal communication channels and grievance mechanisms as well as
complaints that were lodged to and acted upon by government agencies.
compliance with applicable data protection laws and regulations.

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33
Social
Health and Safety
Our Health Program Contact tracing program was likewise developed to identify and contain the spread of the
virus amongst the personnel. Several employees are considered as frontliners due to
Ensuring the health and safety of our personnel is one of the top priorities of the
their constant exposure to passengers, hence, MSD has developed a program for testing
PAL Group. Our Medical Sub-Department (MSD) aims to provide optimal care
and treating employees who may have contracted COVID-19. The Group has accredited
and is committed to look after the employees’ health and well-being.
hospitals for the employees and partnered with several DOH-accredited Diagnostics
At the onset of the COVID-19 threat in early 2020, MSD launched an information Laboratories for the testing program of the Group.
campaign to educate employees about the virus. A dedicated webpage in
Home quarantine is being issued to pilots, cabin crew and ground personnel who may
MyPALNet, the Company intranet was created and became the repository of
have had exposure to passengers/co-workers who are confirmed positive. This is done
numerous information materials about COVID-19. The webpage can be accessed by
through an online portal that automatically sends email notification to the
all employees and provides information to keep employees aware of the preventive
employee. Two quarantine facilities were established in two separate locations for the
measures and actions to avoid catching the virus.
exclusive use of the employees who are confirmed positive of the virus.
When Enhanced Community Quarantine was announced by the Philippine
In partnership with the Lucio Tan Group of Companies, the Group is now preparing for
President, the Group’s MSD continued to provide medical services face to face or via
the vaccination program of all its employees and dependents.
phone calls and issued medicines through PAL Pharmacy. Professional help for
those who seek emotional support to relieve anxiety and stress during the COVID-
19 crisis was also made available to all employees. The MSD also conducted
webinars on COVID, Mental Health and other health related topics and issued
Medical Bulletins to employees via emails.
A Core Emergency Response Team composed of Safety, Security and MSD was
formed to develop programs and manage the exposure of employees and
passengers from COVID-19.
For employees entering any PAL Facility, he or she must first accomplish a Health
Declaration Form via the Online Daily Self-Assessment App. This has an online
database that can be accessed by MSD for review of employee status.

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35
Health and Safety
Emergency Response on COVID
The COVID-19 pandemic has impacted the 21 23 31 07 01 25
Jun
aviation industry severely with national and Jan Jan Jan Feb Mar Apr
international lockdowns, and travel restrictions.
With the pandemic announcement by the World
Health Organization (WHO) last March 2020,
international borders were locked down
and domestic travels were restricted. Except for A reiteration of PAL’s Public Health Emergency Plan was By February 2020, the Group has intensified its health and
some repatriation and cargo only flights, PAL cascaded to all members of the Crisis Management screening measures for the passengers and personnel at the
and PALex operations halted until the lifting of Group as part of the preparation. airport and in all PAL offices and facilities and has enhanced
the lockdown. Strict travel restrictions and the disinfection program. This includes temperature screening
When COVID-19, NCOV back then, was declared a Public
health requirements were imposed soon after. in all entry points at the airport and in all PAL and PALex
Health Emergency of International Concern (PHEIC) last
All of those hindered the aviation industry from offices. Disinfection at the airport, all offices, and all
January 30, 2020, PAL has already intensified the
operating at full capacity. frequently-touched surfaces have been performed regularly as
sanitation program of its aircraft to include the use of
COVID-19 Measures part of the enhanced disinfection program.
disinfectants. Personal Protective Equipment (PPEs) such
Several measures, programs, and policies have as surgical masks were provided to the crew for their By April 2020, the Group has
been adopted both as proactive measures and protection and an information campaign was launched to started developing the “Safe to
reactive counter-measures against COVID-19. inform all PAL/PALex employees about the current Return To Work” program which
situation. contains the health protocols set
At the start of January 2020 when news broke
PAL and PALex activated its Crisis Management Group in by the Department of Labor and
out about a “mysterious illness” in Wuhan,
response to the first reported case onboard one of the Employment, Department of
China, PAL Safety Department immediately
flights. A PAL contact tracing team was also deployed to Health and World Health
coordinated with Bureau of Quarantine (BOQ)
assist the BOQ and Bureau of Epidemiology on tracing all Organization. The program was
and Department of Health (DOH) to establish
possible close contacts of the index case. implemented by June 2020.
early communications for a heightened alert
status. This includes regular communication
updates with health authorities and other
airlines.
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36
Health and Safety
COVID-19 Measures (cont.) Employees, Customers, and Passengers Safety
An online medical self-assessment/questionnaire was In compliance with the minimum health protocols set by the DOH,
implemented as part of the health screening of employees BOQ/IATF, Department of Labor and Employment (DOLE), and/or
reporting back to work to determine the general health Department of Trade and Industry (DTI), all employees, as well as
condition of employees including identification of potential customers and passengers are required to wear PPEs such as face masks
COVID-related symptoms and exposure. and face shields, observe social distancing, and practice health
Manual recording and monitoring of cases were replaced in hygiene/etiquette. PAL and PALex internal policies adopted these minimum
July 2020 by the creation of a COVID Dashboard for real- health protocols which are strictly complied in all areas of operations
time monitoring of internal cases as well as cases reported of the airline. Enhanced sanitation and disinfection routines are observed
in PAL and PALex flights. The tool is currently being used for in all PAL and PALex offices. Strict health and medical monitoring of all
analysis and assessment of flights and passengers affected employees were implemented through the use of various
by COVID. screening methods such as online health declaration forms, temperature
and health screening at all entry points in all PAL and PALex offices and
The Emergency Response Team (ERT) Portal was also facilities, and internal reporting of cases including contact tracing.
launched and implemented by November 2020. This is a
tool for real-time reporting of cases in PAL and PALex flights
Inflight Safety
including identifying personnel exposure and monitoring of
their medical disposition. Additional measures and policies are in place to ensure that the passengers, crew, and aircraft
are protected against the virus pre-flight, in-flight and post-flight. These include mandatory wearing of
PPE for all flight deck and cabin crew, augmented sanitation and disinfection of all the aircraft
in the outstations and maintenance hub, and compliance to all applicable health and safety protocols set
by applicable international regulators and State requirements. All passengers are also required to wear
face mask and face shield on board the flight.
Even before the pandemic, the Group already has an established guideline for managing communicable
diseases on board. Procedures, equipment, and trainings are in place to reassure and help the crew
manage these types of events inflight. Trainings include topics on identification and infection control
precautions. Our procedures highlight the step-by-step actions to be taken by the crew in such
situations.

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37
Health and Safety
Inflight Safety (cont.) • Isolation of the affected passenger by seat
transfer in the last 3 rows of the aircraft
With the recent development on the COVID-
19 pandemic, existing procedures were reviewed • Disinfection of the aircraft at the
and enhanced to specifically handle suspected destination.
cases of COVID-19 inflight. Some of the key points • Assistance to the sick passenger is limited to
on our enhanced procedures are: one cabin crew member who should
• Provision of N95 masks, Nitrile gloves, and wear the required Personal Protective
alcohol for a passenger showing symptoms Kit (PPK) and shall strictly observe the safety
of a communicable disease such as COVID- precaution measures. Universal Precaution
19. Kit (UPK) are also available onboard for
cleaning of areas in cases of respiratory
secretions, vomitus, or excreta.
• Designation of a specific lavatory for the
exclusive use of the sick passenger.
• Storage of soiled items after use in a
biohazard bag.
How Clean Is The Cabin Air You Breathe In Our
Aircraft? Airflow direction in the cabin is from top to bottom
One will be surprised that the air quality in the where 50% of filtered air and 50% fresh air is pumped
aircraft cabin is much cleaner than most indoor from the ceiling into the cabin, then sucked out at
environments. That is because our aircraft are the floor 20-30 times per hour. The HEPA filters clean
equipped with HEPA (High Efficiency Particulate the cabin air completely in about every two to
Air) filters that block and capture 99.99% of three minutes. Passengers are facing the same direction
airborne particles like bacteria and viruses such as and the seatbacks act as barriers that further lowers the
SARS-CoV-2 circulating in the air. risk of virus transmission.

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38
Health and Safety
Our Safety Program Our SMS also interacts with all applicable Aviation SAFETY ACTIVITY FREQUENCY
Authorities and Aerodrome Operators where we Hazard Identification and Reporting Regular
Safety is the responsibility of everyone in PAL and
operate, service providers and suppliers, and other Safety Incident Investigation and Reporting Regular
PALex. The management is committed to continuously
airlines. Safety Meetings (LSTs, SAGs, SC) Regular
improve safety strategies and programs to ensure a Risk Identification, Assessment, Mitigation Regular
high level of Safety Performance and satisfy the Our Safety Management System is structured upon the Flight Data Analysis Regular
Company’s Safety Objectives. four basic components of safety management in Safety Training Yearly
accordance with PCAR and ICAO Document 9859 Safety Communication (Safety Bulletins, Regular
There are several safety programs and activities across
namely: Safety Policy, Safety Risk Management, Safety Notices, etc.)
the organization that ensure all hazards and risks are
Assurance, and Safety Promotion. Crisis Management Exercise Yearly
captured, assessed, mitigated and monitored. Safety
Fire Drills, Earthquake Drills Yearly
Management System (SMS) is continuously being Safety Policy Safety Audits and Assessments Yearly
enhanced to ensure that the organization’s safety External, Statutory and Regulatory Regular
Our SMS policies and procedures explicitly describe our
objectives are achieved or even exceeded. Since last Communications
responsibility, authority, accountability, and
year's pandemic, risks to health and safety of expectation. It is integrated into "the way things are
employees, customers, and passengers are bound to Safety Assurance
done" in our organizational structure and activities
increase if vectors of the virus are not controlled in all because we believe that every employee contributes to Safety performance indicators and targets are in
areas of business. Also, risks of penalties and sanctions the safety and health of our organization. place to validate our performance in the safety
are possible for non-compliance to the minimum
health protocols set by local and international health Safety Risk Management risk management we designed. We have assessments,
regulators. checks, inspections, investigations, reviews, surveys,
Management of risks includes a Hazard
management of change, and observance of best practices.
Safety Management System Identification process which involves the identification
All of these ensure the effectiveness of our safety program.
and analysis of hazards to identify its safety
PAL and PALex Safety Management System (SMS) Safety assurance gives the Group confidence that its
consequences in terms of its effects to operations. We
complies with Philippine Civil Air Regulations (PCAR) set safety standards are met with quality. The Group
use tools to identify hazards such as our safety
and International Civil Aviation Organization (ICAO) checks if the organizational and regulatory procedures are
reporting forms and eReports where all reports
Document 9859 Safety Management Manual. This consistently practiced towards the set performance targets.
received in 2020 were recorded in Aviation Quality
covers Flight Operations, Simulator Training providers, Database (AQD) and all were addressed.
Inflight Services, Maintenance and Engineering, Ground
Operations, Cargo, and Training.

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39
Health and Safety DISCLOSURE 2019 2020 UNITS
Safe Man-Hours 18,090,240 4,018,976 Man-hours
Safety Promotion Workplace Safety Inspection No. of work-related
99 27 cases
injuries
PAL and PALex have developed formal means of • Covers the safety inspection of the Group’s workplaces No. of work-related
safety promotion to ensure that and facilities 0 0 case
fatalities
relevant personnel are fully aware of the SMS • Performed by Ground Safety Specialists No. of work-related ill-
32 3 #
program, safety critical and generic information. health
Ground Safety Inspection No. of safety drills 23 1 Fire drill
Flight Safety and Cabin Safety Inspection • Covers all aspects of ground operations including
100%
• Verifies that flight and cabin crew adhere to activities in the airport and ramp
applicable regulations and established • Performed by Ground Safety Specialists
company standards during flight and identify Occupational Health and Safety
hazards and risks encountered during flight
The Group’s work-related injuries plummeted from 99 Of all reported hazards have been assessed and addressed
operations.
• Covers all flight and cabin crew activities cases in 2019 to only 27 cases in 2020. The trend is the Of all safety incidents have been assessed, investigated, and addressed
starting from the time the crew reports for same for work-related illnesses with only 3 cases in 2020
duty until flight debriefing from 32 cases in 2019.
0
Fatal accident for the past 22 years (PAL)
• Performed by Fleet Safety Pilots and Cabin Both organizations had zero work-related fatalities last Fatal accident for the past 20 years (PALex)
Safety Specialists year. Non-fatal accident for the past 4 years
Flight Data Analysis (FDA) Program A fire drill was conducted last year in PAL Fuel Work related fatalities and high consequence
injuries
• Involves the capture and analysis of data and Management Department to simulate emergency situation
information from onboard recorders in the in fuel depot.
aircraft. Customer Complaints QUANTITY
• Results of flight data analysis are used to DISCLOSURE
2019 2020
determine any safety risks in flight operations There were three (3) substantiated complaints on product
No. of substantiated complaints on
or service health and safety, one (1) of which has been 7 3
and develop safety mitigating actions. product or service health and safety*
• Information derived from the program are addressed and the remaining two (2) are still for resolution No. of complaints addressed 7 1
also used to improve safety by enhancing with the affected passengers. These complaints involved *Substantiated complaints include complaints from customers that went
injury during boarding or while on flight. through the organization’s formal communication channels and grievance
training effectiveness and operational mechanisms as well as complaints that were lodged to and acted upon by
procedures. government agencies.

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40
Health and Safety
Food Safety How do we cook and handle inflight meals?
Established control system for safe cooking, chilling,
As safety is always our top priority, food safety is one and setup is in place. Microbial testing is conducted to
aspect that the Group gives utmost importance to. It verify the effectiveness of food safety management
has always been our commitment to provide our system.
passengers peace of mind by providing safe and
delectable inflight meals. Here are the things we have How do we transport the inflight meals?
been doing to uphold the highest levels of safety from Inflight meals are transported under controlled
the time the meals are prepared until they are loaded conditions from the facility to the aircraft by authorized
in our aircraft. and trained personnel.
How do we source our food supplies? As part of our safety protocol since the pandemic, the
The food supplies are bought from accredited inflight meal service on board was modified. Main
suppliers. An effective approval system is in place to courses are served with foil covers to the passengers.
ensure safe food supply. We have also shifted to disposable cups and utensils.
The business class service was simplified with the
How do we prepare the inflight meals? suspension of One-by-One meal service while the
Food is prepared in a clean and hygienic facility boarding drinks are served in individual pet bottles.
following procedures based on World Food Safety
Guidelines to prevent contamination and ensure food For 2020, our rate of hygiene concerns is 0.0015% from
safety. 0.0037% in 2019, which means we have 1 concern for
every 100,000 meals compared to 2 concerns for every
What personal hygiene standards are in place? 100,000 meals in 2019. We work closely with
Procedures are in place to ensure personal hygiene our caterers to mitigate and control contamination. Rate of Hygiene Concerns
standards exist and are maintained. These include Currently, we do not have food safety concerns that 0.0040%
wearing of PPEs, wearing of masks and hairnets, and lead to payment of fees, penalties, or warnings.
standard operating procedure on handwashing and 0.0037%
others. 0.0020%
0.0015%
0.0000%
2019 2020

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Health and Safety
Aircraft Maintenance Authorities’ mandatory requirements. This ensures that the aircraft
PAL and PALex subcontracts the maintenance of its commercial fleet (except for the and equipment are always in an airworthy condition. PAL AED established the
DeHavilland turboprops) to Lufthansa Technik Philippines (LTP Manila) for line, base, GMM while PALex established their MCM. Both manuals describe the policies
heavy maintenance as well as other CAAP-approved Maintenance and Repair and processes required to achieve the intent of the CAMP, as required by the
Organization (MRO). PALex maintains its turboprop fleet from line maintenance up to CAAP.
A-check, under its own CAAP-approved MRO. Maintenance materials and parts are sourced from approved suppliers
PAL and PALex Aircraft Engineering Department (AED) undertakes planning, which include original equipment manufacturers.
monitoring and control of all maintenance activities and technical compliance of Shop maintenance and overhaul services of engines are provided by
aircraft, engines and accessories with airworthiness requirements and industry Lufthansa Technik AG (LHT), Air France Industries (AFI), IAE International Aero
accepted standards for safety, reliability, and customer acceptability. Engines (IAE), Pratt & Whitney, and Rolls-Royce while the same services for the
Line maintenance in overseas destination stations is subcontracted to CAAP-approved Auxiliary Power Units (APUs) are provided by Honeywell. Component pooling
maintenance organizations. and repair services are handled by Hong Kong Aircraft Engineering Company
Limited (HAECO), LHT and Airbus.
LTP and the outstation service providers are mandated to comply
with the requirements of PAL and PALex Maintenance Schedule and General
Maintenance Manual (GMM) and Maintenance Control Manual (MCM) approved by
the CAAP. AED exercises oversight responsibilities to ensure compliance of the
contracted maintenance providers to the established policies and procedures and
contractual obligations.
The PAL and PALex Fleet is maintained in accordance with the standards mandated by
the aviation authorities such as:
• Civil Aviation Authority of the Philippines (CAAP),
• US Federal Aviation Authority (US-FAA), and the
• European Aviation Safety Agency (EASA)
The Continuous Airworthiness Maintenance Program (CAMP) of PAL and PALex is
approved by the CAAP and is based on Aircraft Manufacturer’s / Original Equipment
Manufacturer’s approved and recommended documents and Airworthiness

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Health and Safety How we got that Star:
Quality Assurance Program
The Quality Assurance Program of the Group includes all planned and systematic actions necessary to enhance confidence that the Group’s management systems. All operations
and maintenance processes are conducted in accordance with the Aviation Authority regulations and the Group’s standards. The Program was established to ensure that all work
performed, processes, controls and procedures in the Group’s operations, vendors, suppliers as well as other organizations who provide contracted services
in support of maintenance and operations, are in accordance with Aviation Authority regulations and the Group’s standards.
With new processes introduced during the pandemic, aside from performing the regular scheduled audits, Quality Department intensified their activities for unannounced
surveillances and unscheduled audits which were part of the enhancement in the Quality Assurance Program. The unscheduled audits and surveillances are conducted in case of
significant changes to the management, organization, operation, technologies used or significant regulatory requirements and in case of quality & safety precursors are identified
in the different aspects of maintenance and operations. This includes focus on new normal safety protocols, aircraft parking & storage, defect management and aircraft
disinfection. Surveillance activities using Safety Assessment of Foreign Aircraft (SAFA) checklists to ensure compliance with ICAO standards were also performed.
Customer Touchpoint Assessment

Additional quality control activities related to customer satisfaction were introduced in 2020.
The Customer Touchpoint Assessment is a new quality control activity which aims to look into customer
experience from booking through contact center or ticket offices, check-in, boarding up to arrival. The
verification involves cabin passenger conditions, inspection of aircraft passenger convenience items,
observance of new normal safety protocol and the delivery of Buong Pusong Alaga service to customers.
Use of Electronic Audit Database
The Group uses Rolls-Royce SMS Solution, (known as Aviation Quality Database (AQD)) in its Quality
Assurance Program. AQD is a software with a complete self-contained quality assurance management
system which includes audit planning, scheduling, audit generation, risk management, finding analysis,
leveling/categorization/analysis, action plan tracking, statistical analysis, and root cause analysis (RCA). It
is a repository of all audit records in electronic format. The AQD is maintained by the Information
Systems Department (ISD). Back-up files/ records are done regularly by ISD based on existing Company
policy.

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Employee Training and Development
We rely on people with the right knowledge, skills, values and attitudes to carry out their duties and
responsibilities in order to fulfill our mission of delivering safe, reliable, efficient and pleasant travel
experience exceeding passenger expectations. Employee training and development play an important role
in our organization in order to ensure that the personnel perform according to what is expected by
customers, as well as in adherence to certain regulations.
Training and Development is responsible for equipping personnel with appropriate skill set and
competencies to perform their job, as well as setting and maintaining right qualifications in compliance with
regulations and company standards.
First and foremost, the Group ensures that training modules for airlines' workforce and third-party providers
are conducted by qualified and competent trainers. Trainers are equipped with the necessary tools and
information in facilitating the trainings required.
Training programs are function-targeted and needs-specific to ensure that trainings are relevant and can
support business objectives and needs. These training programs include technical or regulatory training and
soft skills training. The Company recognizes the importance of training and equipping people with the
necessary knowledge on regulatory requirements, since non-compliance to the mandatory requirement will
expose us to penalties or cancellation of permits. Soft skills training are also given importance as these will
support the behavioral/social aspect of the business unit and function.
The Group’s Training and Development impacts various stakeholders of the business. A successful training
program will develop employees to become competent and productive and ensures that our passengers
ultimately benefit from the service that our employees render.
TOTAL AVERAGE
The airline invests heavily in infrastructure and equipment for training of its employees. The PAL Learning EMPLOYEE TRAINING HOURS TRAINING HOURS PER
Center is a facility dedicated to conducting various technical and soft skills training of pilots, cabin crew and IN 2020 EMPLOYEE IN 2020
ground personnel. The airline invested in Flight Simulators and Flight Training Devices for pilots. A Cabin Female 49,845 13
Fire Simulator was also acquired to train pilots, cabin crews and ground personnel for handling a fire Male 61,475 17
incident inside an aircraft, in the office and facilities. The airline makes use of technology for e-learning,
online training, and blended learning, and for keeping training records of employees.

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Employee Training and Development How we got that Star:
Our Trainers Regular meetings and commitment setting are conducted for a more people-
The training initiatives are aligned with the Group’s vision. Developing employees centric approach to ensure performance.
is the primary role of Training to ensure that employees are skilled and Training and Development also support the operations team during the IOSA audits
knowledgeable to ensure business continuity. for documentation and compliance to safe operational practices.
Training and Development develops programs that are needs-specific. They Training and Development is also a support arm during New Station Openings and
provide more tailored training solutions that address training gaps in specific when there are new systems to be used such as Passenger Services System for
functions within departments. These learning and development solutions are Airport Operations and Sales, providing training to the employees deployed to
attuned to the current challenges and needs of departments. handle operations in the New Station.
Our trainers provide curriculum-based courses to client-departments for a more Our team of trainers participated in the monthly Safety Action Group meetings
holistic development of employees. Our trainers cater to the needs of employees where operational situations and concerns were discussed.
from PAL, PALex and Third-party handlers or employees assigned to work for
Moving forward, the Group plans to pursue the following:
various functions and locations such as the Airport (particularly at the check-in
1. Benchmarking with other organizations in the same or related industries on
counters, gates, ramp, baggage and cargo offices) and Contact Center being Third
training solutions.
party providers.
2. Trainer development by taking certification and developmental workshops
The manner by which these training programs are implemented have been provided by credible training firms and institutions for the purpose of
integrated in the performance management system for the trainers, which includes continuous development.
assessment for commitment setting, monitoring, coaching, and ensuring the 3. Strengthening of training evaluation techniques to be able to translate
success of the program and trainings. learning to actual business objectives.
The Group makes use of technology for collaboration, faster coordination, and 4. Strengthening of contextualized and organizational research for conceptual
close monitoring of performance. Cloud-based drives, software, and systems have or theoretical development in content, methodologies, and facilitation.
been utilized for communication, documentation, file storage, among others. 5. Enhancing group-specific handling processes of learning and development
solutions

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Employee Training and Development
Pilot Training
The training and development of flight deck crew and flight dispatchers of Philippine
Airlines, and other non-PAL personnel, as necessary, is handled by the PAL Aviation
Training Center (PATC). The PATC ensures all training and qualification requirements of
pilots and dispatchers are compliant with: (a) Regulatory (CAAP); (b) International Civil
Aviation Organization (ICAO); (c) IATA Operational Safety Audit (IOSA); and (d) Other
needs by (but not limited to) Flight Operations Department (FOD), Integrated Operations
Control Center (IOCC), and Safety Department.
To ensure the efficiency of flight trainings, various divisions under PATC are responsible for
the different aspects of training. The Flight Training Division upholds training standards of B777 Enhanced Virtual Trainer
the Company by training, guiding, and monitoring the performance of pilots and flight
instructors using flight training devices. This division also provides type-rating and
instructor courses. The Ground Training Division provides theoretical and practical
instructions, periodic refresher, recurrent, and special courses to flight crew and
dispatchers. It also supports the ground training needs of pilots for type-rating and
instructor courses. The Quality and Standards Division takes care of planning, organizing,
and implementing the quality management system of PATC. This office ensures that the
highest standards of training are given to the flight crew members and flight dispatchers.
Last but not the least, the PAL Aviation School (PALAS) Division provides Ab-initio program
for pilot trainees. The PALAS produce pilots that will eventually join the airline. A320 Full Flight
Training is mostly done in classrooms, Flight Training Devices, and blended learning using Simulator located
Learning Management System (LMS) or e-learning. Pilot Training venues include the PATC inside the PAL Flight
Ground Training Division, PATC PAL Aviation School, and PAL Flight Simulator Training Simulator Building in
Andrews Avenue,
Building, all located in Andrews Avenue, Pasay City. For the simulator trainings of A330,
Pasay City
A350 and B777 flight crew, our pilots are sent to various simulator training venues in the
Asian region.

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Pilot Training (cont.)
PATC has an Approved Training Organization Certificate PATC started working on digital transformation of grade
(ATOC) given by the Civil Aviation Authority of the slips as well as transformation into Competency Based
Philippines (CAAP) which allows the Sub-department to Training (CBT) and eventually go into Evidence Based
conduct pilot and dispatcher training for both internal and Training (EBT). This will enable us to evaluate the
external clients. performance of all our pilots and instructors from the data
Internal clients are from FOD and IOCC, specifically from gathered during training
Flight Dispatch Division. Ground Training Division mostly Non-compliance in training-related regulatory requirement
provides training to our external clients from PALex. would not allow pilots and dispatchers to fulfill their duties.
We do not only adhere and comply with regulatory or This would result in shortage of manning and penalties
mandated requirement but also work on the improvement from regulators not only in the Philippines, but also in out-
on the quality of our training. We continue to standardize stations where PAL flies.
and improve the quality of our ground and flight instructors PATC also use training performance to gauge the skill level
by giving them valuable workshops and additional trainings. of our trainees and determine areas of improvement.
All instructors undergo Airbus Pilot Instructor Course (APIC), Training must be as dynamic as how the aviation industry
which comprises the Core Course (given to all instructors), evolves. Data gathered from all stakeholders are used to
and the type-specific (given to all Airbus simulator draw up a training solution for the improvement of our
instructors). An instructor’s workshop entitled “Effective trainees. This ensures high standards of safety and
Performance Coaching” is being given to all instructors. efficiency of our crew.
Improvement in training methodologies and evaluation has
been the main topic of improvement.

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47
Cabin Crew Training
The Inflight Services Training (IFST) Division provides IFST is supported through the provision of
competent and qualified cabin crew members resources and trainings necessary to provide the
rostered in the line through the promotion of the required trainings to cabin crew. The Company has
safety culture through the trainings provided. The invested in training equipment such as Door Trainers,
trainings include Initial Training for new cabin crew, Swimming Pool, and Cabin Fire and Smoke Trainer
Recurrent Training, Re-qualification Training, Senior which is a special structural equipment that simulates
Cabin Crew Training, and Recency Training. Cabin inflight fire scenarios.
Crew Training Programs are guided by RP-Civil
With limited face-to-face trainings, the airline has
Aviation Regulation and IATA regulations and policies
increased the use of the Learning Management
in maintaining high safety standards in training.
System (e-learning or computer-based training). We
IFST trainers undergo IATA qualifications, Red Cross keep these training resources and facilities available,
Trainings, Greenlight Trainings, and other trainings to well-maintained, functional, and compliant to
be equipped and competent to train cabin crew. regulatory requirements to ensure we have
Apart from the trainings mandated by regulators, IFST competent cabin crew certificate holders. We continue to seek improvement in our training
also conducts other forms of training for our cabin programs as we pursue excellence in our services to
crew such as Inflight Service Trainings which place Cabin Fire and Smoke Trainer stand as a barometer in Safety and Service
PAL and PALex crew at par with the industry’s best Standards.
cabin crew. Trainings required by World Health
Safety is our top priority. By embedding and
Organization (WHO), Transportation Security
emphasizing safety in our trainings, we instill the
Administration (TSA), Office of Transport Security
culture of safety not just within our work
(OTS) and First Aid requirements for cabin health and
environment but also outside the workplace.
security are also included in the cabin crew training
program.

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48
Ground Crew Training Employees, both individual contributors and leaders, from different groups, namely,
Commercial, Office of the President, Operations, Finance & Administration, PALex
For Airport personnel, Reservations and Ticketing personnel to be fully equipped
and Third-party providers are also trained on curriculum-based soft skills.
and in strict compliance to regulatory bodies, they undergo regular trainings.
Trainers ensure that licenses of airport personnel are maintained and current as a All the technical trainings are aligned with the contents of the various manuals
requirement. The Commercial Training and Development Division (CTDD) trainers used in our operations.
attend the initial and recurrent Dangerous Goods (DG) Regulations training at IATA
as a mandatory requirement to meet regulatory compliance.
For behavioral skills which encompasses both technical and non-technical skilled
employees, the Management and People Development Division (MPDD) ensure
regular consultation with each department for their team's professional
development.
Curriculum-based courses are provided to client-departments that request courses
on customer service, personality development, communication, values formation,
and new employee indoctrination for a more holistic development of new
employees.
Trainings other than technical or regulatory are provided to better prepare
employees (leader and staff) to manage other factors that may affect a person’s
emotions & behavior, productivity and relationship towards his colleagues & other
external parties.

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49
Customer Management
Our Response to COVID-19
Being part of an industry that is heavily hit by the effects of COVID-19, PAL and
PALex had to adapt quickly in explicable yet astounding ways amidst unprecedented
changes in travel restrictions, requirements, and safety protocols.
Now, more than ever, our duty remains the same—to ensure everyone a safe Being in enclosed spaces may be a concern of travelers, but about 50% of the air in
travel experience, while maintaining our service culture of heartwarming service the cabin is refreshed every 2 to 3 minutes. The other 50% that is recirculated in the
or buong pusong alaga. Safety and wholehearted service. This is the promise we cabin goes through hospital-grade High Efficiency Particulate Air Filters (or HEPA
committed to our passengers when we first flew 80 years ago, and one we are Filters) that eliminates up to 99.99% of airborne viruses and bacteria. Also, the air
determined to keep amidst this global pandemic. Philippine Airlines welcomes flow in the cabin goes from top to bottom, never left to right or front to back. This
everyone to the New Normal with our Same Heart. further reduces the already low risk spread of airborne microbes.
Keeping You Safe Always Inflight meals continue to follow strict Hazard Analysis Critical Control Point
Guided by this mantra of New Normal Same Heart, the Group has transformed its (HACCP) procedures and are placed in sanitized containers. Seat distancing inside
entire travel experience; from the minute the passenger books a flight to the the aircraft are observed depending on space availability. When flights are not full,
moment they land. All measures have been put in place so that passengers can fly we continue to allocate seat assignments, upon check-in at the airport, in a way
worry-free on their next trips with us. that maximizes personal distance between our passengers. Business class
passengers enjoy the same ultimate comfort and exclusivity with plush seats,
To ensure minimized contact, our ticket offices and airport counters are equipped
exclusive cabin space, and dedicated lavatories. Economy class passengers also have
with protective barriers, and our staff are wearing the appropriate facial coverings.
the option to purchase Neighbor-Free seats for added peace of mind and comfort.
Thermal scans and footbaths are also observed at every entrance, while hand
sanitizers are available in key areas. Our personnel also ensure that customers and We have intensified our cleaning and disinfecting measures especially in high touch
passengers maintain the right social distancing guidelines. We have also areas on ground—including barriers, counters, seating areas, and push carts. Cabin
implemented contactless transactions by opening our online check-in surfaces in our aircraft are properly and rigorously disinfected using high-grade, eco-
facility and have enforced self-tearing and self-scanning of boarding passes in select friendly cleaning agents after every flight, including frequent sanitation
routes and airports. and disinfection of our lavatories and high-touch surfaces by our cabin crew during
every flight.

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Customer Management
Staying in the Know, Now
At the start of the pandemic, the Group has set up a COVID-19 information Capitalizing on technology, PAL has implemented a digital infrastructure, via
center—a dedicated webpage of the PAL Website that provides the latest the Passenger Profile and Health Declaration System, that allows passenger
updates on PAL and PALex flights and travel rules and requirements, whether convenience on registration, verification, and test payments, as well as
passengers are departing from, arriving in, or traveling within the Philippines. seamless integration with process partners.
Our communication efforts have also been amplified to further reach our Maximum Flexibility for Flight Changes
customers in different channels via e-mails, SMS, print media and press
releases, and in our social media pages. We acknowledge that uncertain times can also lead to uncertain plans. For
greater flexibility even for voluntary changes, the Group has also introduced
Testing Made Convenient the No-Worry Flight Fare Brand—which allows passengers unlimited
Our promise to ensure the most convenient and seamless travel experience rebooking, or the option to also convert their tickets to a Travel Voucher or
has led us to pilot several customer-centric initiatives before and after they request for a refund, subject to applicable terms depending on the ticket’s
fly with PAL and PALex. We have set up testing facilities, in partnership with fare family. The launch of our myPAL Request Hub, an online facility for
DOH-accredited Diagnostics Laboratory, that administer COVID-19 tests to submission of booking change requests, has provided more convenience to
our passengers flying to destinations that require negative RT-PCR or Antigen our passengers, as they are able to transact at the comfort of their
tests before departure. Likewise, we have partnered with at least homes anytime.
15 private testing laboratories in more than 50 locations nationwide, so our
passengers can get exclusive or discounted rates and/or quicker release of
test results wherever they start their travels with us.
For passengers arriving in the Philippines, our own International One Stop
Shop works in tandem with other agencies to ensure passengers follow and
observe the arrival and quarantine protocols set by the Philippine
government. Our partnership with the Hotel Sales and Marketing Association
(HSMA) also provides our travelers with exclusive rates in over 60 Metro
Manila Hotels for their quarantine stay.

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Customer Management
Customer Satisfaction Quarterly 2020 Net Promoter Score (NPS) Safety Perception Rating
The Group solicits close to real-time customer feedback through 60%
64%
56%
the Post Trip Survey. The survey is conducted through a self- 53% 58%
accomplished questionnaire designed to meet the following 44% 48%
research objective: 32%
• To measure overall customer experience metrics: Customer 23%

18% 18%
Satisfaction (CSAT), Net Promoter Score and Intent to Fly with
PAL (ITF) Q1 Q2 Q3 Q4
Q2 Q3 Q4
Promoter Detractor To monitor COVID-19 safety concerns of passengers,
• To determine touchpoint CSAT with drill-down to airport and NPS significantly improved quarter on quarter coming safety questions for tracking Safety Perception
inflight experience from the dip in 2nd quarter during the lockdown. Rating was introduced on the 4th week of May 2020
• Draw customer feedback and identify improvement areas
Overall Customer Satisfaction (CSAT) Intent to Fly With PAL Group
E-mail survey invitations are sent daily to all customers who have
flown with PAL and PALex and have provided valid e-mail 80% 82%
75%
addresses. 50%
53% 66%
48%
The Group has also invested in a Customer Experience 40%
Management Tool that operationalizes gathering and analysis of Q2 Q3 Q4 Q1 Q2 Q3 Q4
Q1
Voice of Customer (VOC) along with the customer journey. The tool 2 nd
CSAT and Intent to Fly with PAL Group has been on an upward trend since quarter after implementation of
enables the group to collect passenger feedback about their enhanced safety protocols and One-Stop-Shop program for testing and quarantine hotel booking.
experience on-ground and inflight using our robust survey tool that
Our Customer Experience Metrics took a beating in the 2nd quarter of 2020 after the declaration of COVID-
utilizes email, QR code, and other channels. This allows the group
19 as a pandemic and the placement of National Capital Region under Enhanced Community Quarantine,
to check if the minimum requirements of customers are being
freezing our operations except for repatriation flights and essential cargo-only flights. As we slowly resume
delivered, to identify key areas of improvement that will address
commercial flights in the 3rd quarter, the intensified safety protocols on-ground and during flights has
pain points of customers, as well as to formulate product and
given back reassurance and confidence to the passengers to fly with PAL, thereby significantly improving
service offerings that will continue to delight our customers while
our scores quarter-on-quarter, ending the year with scores higher than the 1st quarter, the period before
delivering our brand promise of Buong Pusong Alaga (whole-
the pandemic. The Safety Perception Rating, which we began tracking in the 4th week of
hearted service) in the midst of the pandemic.
May, continuously increased from 48% to 64% in the 4th quarter.

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Employee Hiring and Benefits
Employee Hiring Benefits
Talent Acquisition remains true to its objectives and that is to fill the Group’s The Group provides comprehensive benefits and policies which include Medical, free and
manpower requirement observing the internal fulfillment guidelines and reduced-fare tickets for the employee and dependents, service awards, perfect attendance
complying with the Department of Labor and Employment orders and awards, as well as various leaves. The Employee Benefits office also facilitates employee
advisories, including Republic Act 10911, also known as the Anti-Age availment of social benefits from the government.
Discrimination in Employment Act; and Republic Act 10173, also known as Non-compliance with rules on availment of statutory social benefits are punishable in
the Data Privacy Act of 2012 when hiring external candidates. accordance with the law.
Any violation of RA 10911 shall be punished with a fine of not less than PAL PALex
P50,000 but not more than P500,000, or imprisonment of not less than three YES % OF EMPLOYEES WHO
months but not more than two years, or both, at the discretion of the court. EMPLOYEE BENEFITS
OR NO AVAILED FOR THE YEAR
We conduct benchmarking for best practices in the field of Talent FEMALE MALE FEMALE MALE
Acquisition. We partner with hiring departments in identifying the skillset of a.) SSS (Calamity and Salary Loan) Y 9% 6% 24% 22%
candidates to fill the role. Digitalization plays a big role in the improvement of b.) PhilHealth Y 2% 1% 7% 4%
processes. An end-to-end automation of travel benefits processing will allow c.) Pag-ibig (Calamity loan and MPL) Y 4% 5% 20% 19%
the employees access to his travel privilege, online ticketing, payment and d.) Parental Leaves (Solo Parent Leave) Y 4% 2% 9% 2%
refund features. Digitalization of employee records and documents also e.) Sick Leaves Y 4% 3% 98% 93%
improved document management. d.) Vacation Leaves Y 97% 97% 96% 97%
We have existing guidelines/policies and a Manual to refer to in Talent e.) Medical Benefits (aside from PhilHealth) Y 87% 87% 69% 68%
Acquisition. f.) Housing Assistance (aside from Pag-ibig) N - - - -
g.) Retirement Fund (aside from SSS) Y 1% 0% 0% 1%
EMPLOYEE DATA AS OF 31-DECEMBER-2020: PAL PALex h.) Further Education Support N - - - -
Total number of male employees 3,018 702 i.) Company Stock Options N - - - -
Total number of female employees 3,220 520 j.) Telecommuting Y 38% 32% 74% 63%
Attrition rate (voluntary and involuntary) 8.20% 15.26% k.) Flexible working hours Y data not available 29% 18%
Ratio of lowest paid employee against minimum wage 104% 105%
l.) (Others) (Emergency Leaves, etc.) Y 39% 31% not applicable

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53
Environment
Resource Management
The Philippines ranked 17th in the world as the most affected Energy Efficiency
country from extreme weather events (both in terms of the The Group’s energy consumption mainly relies on non-
fatalities as well as the economic losses that occurred) in the renewable energy sources. Airline operations use large
Global Climate Risk Index (CRI) 2021 and ranked 4th in the amounts of fossil fuels: Jet A-1 fuel for the aircraft, Gasoline
world as the most affected country over the last two and Diesel for the shuttle service, ground equipment and
decades (2000-2019). generator sets, Coal for power generation (main source of
The Group is aware of its responsibility to its country to help distributed electricity purchased from electric distribution
mitigate climate change while continuing its operation and companies) for the occupied buildings and offices.
has implemented the Environmental Management System. Our operations use large amounts of energy which contributes
The Management has approved the implementation of the to the depletion of the resources. With this, the
Environmental Management System (EMS) which identifies Group committed to reduce the energy consumption.
the environmental aspects and impacts of the Group’s Energy Consumption (Electricity)
activities, focusing on which mitigating measures should be
implemented. The Management has set the targets that the The Group is committed to improve its energy efficiency
Group will take to reduce its impact on the environment. annually by implementing energy conservation measures. This
These are: (1) Compliance to the International Civil Aviation is monitored through the Environmental Management System,
Organization (ICAO) - Carbon Offsetting and Reduction and we have set a target to reduce energy consumption
Scheme for International Aviation (2) Reduction of Energy (electricity) by 5% with 2018 data as baseline.
Consumption (3) Reduction of Water Consumption (4) The Group continue to implement simple yet effective
Reduction of Plastic Consumption (5) Reduction of Paper measures to further reduce energy consumption, such as
Consumption (6) Reduction of Residual Waste (7) Reduction switching from fluorescent lamps to LED, setting of room
of Hazardous Waste Generation temperature from 22°C to 25°C in all offices, regulating the
The Management is committed to provide the necessary time of turning on and off of office appliances and
human and financial resources to help achieve the targets. equipment, and conducting of regular preventive maintenance.

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Resource Management
The Group has also invested in energy efficient Amid the COVID-19 pandemic, the Group Energy consumption within the organization
office equipment. continues to implement fuel efficiency DISCLOSURE QUANTITY UNITS
The implementation of community quarantine initiatives using the IATA four-pillar strategy.
Energy consumption (renewable sources) N/A GJ
in the Philippines due to the COVID-19 Fuel conservation measures are in place to
Energy consumption (jet fuel) 21.7 million GJ
pandemic, has restricted and limited the ensure reductions in fuel consumption.
Energy consumption (gasoline) 3,314 GJ
movement of personnel. This led to shifting to Energy Consumption (Diesel and Gasoline) Energy consumption (LPG) N/A GJ
digital means of communication, temporary Energy consumption (diesel) 42,671 GJ
With the limited number of operated flights,
work suspension and implementation of work Energy consumption (electricity) 11.7 million kWh
the gasoline and diesel consumption of the
from home set-up for most employees. This is
Group also decreased by 34% or Reduction of energy consumption
also the main reason why the energy
1,673 Gigajoules and 59% or 61,056
consumption (electricity) dropped by 40% - DISCLOSURE QUANTITY UNITS
Gigajoules, respectively.
from 19.4 million kilowatt-hour last 2019 to Energy reduction (renewable) N/A GJ
11.7 million kilowatt- hour in 2020. Continuous use of non-renewable energy can
lead to depletion of resources that will Energy reduction (jet fuel) 36.8 GJ
Energy Consumption (Jet A-1) Energy reduction (gasoline) 1,673 GJ
increase the cost of buying fuel and
The current COVID-19 pandemic has severely electricity needed for the operation. This Energy reduction (LPG) N/A GJ
affected demand for aviation transport which presents an opportunity for PAL and PALex to Energy reduction (diesel) 61,056 GJ
led the airlines to cancel most of its flights. The do a study in further improving its energy
Energy reduction (electricity) 7.1 million kWh
Group mainly operated repatriation, cargo only efficiency using available new technology.
flights and a limited number of commercial Energy Consumption in the Organization
The Group has no facilities in using
flights due to travel restrictions. As a result, the 80
renewable sources while Liquified Petroleum
Millions
Group’s energy consumption for Jet A-1 58.45
Gas (LPG) data are being monitored by our 60
significantly reduced by 63% from 58.5 million
service provider. 19.42
Gigajoules (GJ) in 2019 to 21.7 40
21.70
million Gigajoules (GJ) in 2020. This year's unit 20 0.005 0.104 11.73
of measure was changed to GJ from tons last 0.003 0.043
0
year. Energy consumption (Jet Energy consumption Energy consumption Energy consumption
A-1 fuel) in GJ (gasoline) in GJ (diesel) in GJ (electricity) in kWh
2019 2020

Report Values
56
Resource Management
Water Consumption importance of sanitation, hygiene, and access to Water consumption within the organization
clean water in preventing and containing
Rising human populations are leading to increased DISCLOSURE QUANTITY UNITS
diseases.
demand for water. In the Philippines, around one
(1) in ten (10) people still do not have access to Knowing the importance of water in its operation, Water withdrawal (Cebu) 13,796 Cubic meters
improved water sources. This is driving over- the Group is committed to reduce its operational
extraction of water and pollution of freshwater water consumption to prevent depletion of Water consumption 139,125 Cubic meters
ecosystems - resulting to rivers running dry, lake resources.
and groundwater levels dropping, and freshwater Water recycled and reused N/A Cubic meters
Amidst the COVID-19 pandemic, the Group
species becoming endangered. In the last couple continued to apply the water conservation Water Consumption
of years, we have been experiencing water measures implemented in the previous years such (in cubic meters)
shortage from time to time, forcing water as placing signages across various areas about 400
concessionaires to implement rotational water
Thousands
water conservation and regularly checking 306.4
interruption. 300
pipelines for leaks and performing preventive
Water supply is essential to the Group’s maintenance. The reduction of employees
200
operations. It is mainly used in our offices and reporting to work and decrease in flight 139.1
buildings for sanitation and cooling towers, operations were the main contributors in the 100
potable water supply in our aircraft and in meal decrease of water consumption in 2020. The 17.9 13.8
preparations by our caterers. With the ongoing usage has dropped by 55% equivalent to 167,272 0
COVID-19 pandemic, we have seen the cubic meters compared to 2019 consumption. Water withdrawal Water consumption
2019 2020

Report Values
57
Ecosystem and Biodiversity Environmental Impact
Wildlife Greenhouse Gas (GHG) Emission
Illegal wildlife traffickers smuggle endangered species aboard passenger The aviation industry depends on liquid fossil fuels and has inherently long
flights, hide wildlife in cargo loaded onto planes and send illegal wildlife technology development and fleet turnover times, which make it difficult for the
products around the world. Unabated, illegal wildlife trade sector to decarbonize.
threatens the survival of iconic species. The current COVID-19 pandemic has severely affected demand for aviation
The aviation industry is committed to playing its part in stopping this illegal transport, with global passenger traffic results for 2020 showing that demand
trade in wildlife, worth at least US$ 19 billion annually. (revenue passenger kilometers or RPKs) fell by 65.9% compared to the full year of
2019, by far the sharpest traffic decline in aviation history. The aviation industry
PAL is a signatory of the United for Wildlife Transport Taskforce Buckingham
expects emissions to increase in the coming decades, despite the current COVID-
Palace Declaration that agrees to implement the commitments relating to
19 pandemic, which is currently estimated to impact traffic until at least 2024.
the airline industry, as part of its intention to tackle the issue and bring an
end to illegal wildlife trade. The Group recognizes its responsibility to help mitigate climate change. The
airlines have adopted IATA's Four Pillar Strategy to help achieve the targets to
Wildlife trafficking is also known to pose risks to public health.
mitigate carbon dioxide emissions from air transport.
Approximately 75% of emerging infectious diseases in humans–such as
Ebola, HIV/AIDS, and severe acute respiratory syndrome (SARS) – originated Pillar 1: Improved Technology
from animals.
The Group continues to invest in modern fleet which are more fuel-efficient,
with lower carbon emissions and lesser noise compared to previous-
generation aircraft.
Pillar 2: Operational Measures
The Group strives to improve our existing fuel efficiency programs. We adopt the
industry's best practices in fuel and carbon emission reductions.
▪ Single Engine Taxi-In (SETI)
One engine shutdown after a prescribed time. Remaining engine capable
of taxiing into gate leading to lower fuel consumption.

Report Values
58
Environmental Impact
Greenhouse Gas Emission (cont.) Updates aids in the generation of Green House Gas Emission
the flight plans utilizing optimum routes for fuel/cost-
▪ Estimated Fuel Remaining (EFR) Reduction efficient operations. DISCLOSURE QUANTITY UNITS
Revision of required fuel upon landing for
Pillar 4: Global Market-Based Measure (MBM) Direct (Scope 1) GHG
A330 and A321 leading to lower total fuel 1,593,404 Ton CO2e
loaded Philippines through CAAP has voluntarily participated Emissions
▪ Improved Zero Fuel Weight (ZFW) Accuracy in the Pilot Phase of ICAO initiated Carbon Offsetting Indirect (Scope 2) GHG
8,345 Ton CO2e
This permits better initial fuel projections and Reduction Scheme for International Aviation Emissions
and minimizes excess fuel load. (CORSIA) which will start in 2021. With this, PAL Emissions of ozone-
▪ Reduction of Unplanned Extra Fuel (UEF) and PALex are required to submit Emissions Report No data
depleting substances Ton CO2e
Limitation of requested extra fuel by the from 2019 to 2035 and purchase and cancel available
(ODS)
flight deck crew. Done with strict allocation “emission units” to offset the growth in CO2 emissions
of anticipated extra fuel requests within the covered by the scheme for international flights
operated between volunteering states. GHG Emission
flight plan fuel load.
(tons CO2e)
▪ B777 Engine Data Base Adjustment Several challenges were experienced in data
Allows increase accuracy in fuel required and collection because of the implemented community
loaded for flight. quarantine but PAL and PALex were able to submit Total
16.02
42.95
By implementing these fuel efficiency initiatives, the the verified Emissions Report to CAAP in 2020.
Group was able to reduce 2,035 tons of fuel The reduction in the Group’s operation due to the 0.08
Indirect (Scope 2)
equivalent to 6,431 tons of CO2 emissions. pandemic coupled by the measures implemented to
0.14
reduce the energy consumption resulted in the

Pillar 3: Improved Infrastructure 15.93
substantial drop in GHG emissions by 63% for direct Direct (Scope 1)
42.81
PAL and PALEx remain in close coordination with Air sources (flight operations) and 40% for indirect
Traffic Management for enhancements sources (purchased electricity) compared to 2019. 0 10 20 30 40 50
on navigational procedures. Operational Flight x 100000
Plan (OFP) preparation using Jet Planner with Wind 2020 2019

Report Values
59
Other Environmental Measures The Group is committed to reduce its Solid Waste Generation
solid waste generation by enhancing waste
Ground Emissions segregation and finding alternative materials as DISCLOSURE QUANTITY UNITS
The Group operates EURO V compliant COBUS used as replacement to single use items. Total solid waste generated 1,586,868 kg
airport shuttle bus. These transport vehicles have Reusable N/A kg
diesel engines with low emission of gaseous and Our solid waste hauler oversees segregation of waste Recyclable 369,278 kg
particulate pollutants. into different categories: Recyclable, Compostable, Composted 242,850 kg
Food Waste, and Residual. Food waste and Incinerated N/A kg
Aircraft Noise compostable materials are decomposed through Residuals/Landfilled 974,740 kg
The Group complies with ICAO Chapter 4 Noise bokashi and vermicomposting. Recyclable materials
Standard with its modern fleet that emits less aircraft are recovered and sold to various recycling facilities Solid Waste Generation
noise. and residual wastes are disposed to a sanitary in kilograms
landfill.
5
Solid Waste
Millions
4.26
Each year, an estimated one third of all food produced The COVID-19 pandemic has also reduced the Group’s 4
around the world – equivalent to 1.3 billion tons worth waste generation. Solid waste generated in 2020
around $1 trillion – ends up rotting in the bins of decreased by 65% or 2.88M kilograms from 3
2.33
consumers and retailers or spoiling due generation in 2019 due to flight reductions. However,
2 1.59
to poor transportation and harvesting practices. there was an increase in the solid waste generated
1.03 0.91 0.97
Decomposition of solid waste emits greenhouse gas- per passenger due to a shift into disposable materials 1
methane (CH4). 0.37
from rotable tableware to ensure passenger safety. 0.24
0
Total solid waste Recyclable Composted Residuals/Landfilled
The Group generates large amounts of waste in its The Group is studying some alternative sustainable generated
operations. It is composed of 24% Recyclables, 6% materials to replace its current inflight items.
2019 2020
Compostable, 10% Food Waste, and 60% Residual
Waste. Waste generated mainly comes from
its catering facility and flights are the main sources of
the solid waste.

Report Values
60
Hazardous Waste Effluents Hazardous waste
The Group’s operation generates hazardous More than 80 per cent of wastewater resulting DISCLOSURE QUANTITY UNITS
waste from the flight operations and from human activities is discharged into rivers
occupancy of buildings and offices. Hazardous or seas without any pollution removal. This Total weight of hazardous waste generated 52.45 Tons
waste generated by the Group are used lead results to pollution of water bodies which are
acid batteries, busted fluorescent lamps, used the habitat of marine biodiversity. Total weight of hazardous waste transported 3 Tons
industrial oil and infectious waste.
The Group is doing its share to prevent and Effluents
The Group complies with RA 6969 or the Toxic significantly reduce marine pollution by the
Substances and Hazardous and Nuclear treatment of wastewater produced in its DISCLOSURE QUANTITY UNITS
Wastes Control Act of 1990. operations.
Total volume of water discharges 25,721 Cubic meters
In 2020, there was an increase in hazardous PAL has also invested in a Sewage Treatment Percent of wastewater recycled 0 %
waste from 22.91 tons in 2019 to 52.45 tons Plant (STP) to treat the wastewater from its
due to infectious waste generated with the catering operations. In 2020, amid the COVID-
ongoing COVID-19 pandemic. In compliance 19 pandemic, the STP remained operational Hazardous Waste Generation Effluent
to the regulatory guidance on waste and discharged 25,721 cubic meters of (in tons) (in cubic meters)
management, all waste coming from flights effluent from 41,139 cubic meters in 2019. 60,000
60 52.45
with suspected or confirmed COVID-19 case The decrease by 37% from 2019 data is due to
should be disposed as infectious waste. The the limited number of meals prepared by the 41,139
Group has transported 3 tons of hazardous caterer. Lavatory waste of aircraft is still 40 40,000
waste in 2020. treated in the STP managed by Manila 25,721
22.91
International Airport Authority. 20,000
20
The Group will explore alternative non-toxic /
non-hazardous materials to reduce the Improper disposal of wastewater will pose
hazardous waste generated. reputational risk and legal liabilities. 0 0
2019 2020 2019 2020
PAL will explore reduction of wastewater
generation and reuse of treated wastewater.
Report Values
61
Our People and Values
Employee Welfare and Communication
PAL’s Employee Welfare and Communication (EWC), a team under the Human Capital
Department, is dedicated to identifying and addressing the needs of the employees to promote
their well-being and communicating the various programs with employees.
The COVID-19 pandemic has not only affected the airline’s business, but also the lives of the
thousands of employees that depend on the airline for their daily bread. Challenges faced by our
people include financial setbacks arising from reduced earnings due to leaves without pay, stress
and anxiety affecting both physical and mental health, among others. To provide support to the
employees, the EWC organized various webinars that give value to the employees, addressing the
needs of the employees affected by the pandemic. Diverse topics were discussed in the
numerous webinars conducted since June 2020, touching on the following:
• Webinars to help employees maximize their Work From Home experience
• Online sessions to re-educate employees on their various Company, Government and
Medical Benefits
• Online sessions aimed at providing employees physical, mental, emotional, and spiritual
guidance, knowledge and skills during the pandemic
• Online platform that allows employees to promote and sell their products and services Monthly Town Halls starting in April 2020 to March 2021 were organized
• Webinars on entrepreneurship, starting and managing own business to equip employees and conducted to regularly communicate with PAL employees on business,
should they plan to go into business financial, and employee support, and other updates. FAQs were prepared
• Online sessions on managing finances and investments and communicated to employees after each town hall. Post town hall
• A partnership with Microsoft PHLs, Go PHLs and LinkedIn to provide employees surveys were conducted to get employees’ satisfaction about the town hall
opportunities for upskilling through free online courses and Confidence in the Company’s leadership.
• Online sessions to help employees increase employability
• Company partners that offered part-time and full-time opportunities to employees who
were on 15-day Leave Without Pay and during the Outplacement Activity after the
rationalization program.

Report Values
63
Corporate Social Responsibilities
The Philippine Airlines Foundation (PAL Foundation) promotes social sustainability

through its programs involving engagements with underprivileged communities.
The Foundation extends humanitarian assistance for the welfare of neglected
members of the Philippine society including youth, elderly, medical patients, persons
with disabilities (PWD), victims of calamities, poverty and indigenous people.
Youth, Persons with Disabilities

Under the Foundation’s flagship corporate social responsibility program,
#RPRSNTPinoy! (Represent Pinoy), the Foundation aims to encourage the youth to
enhance their talents and skills and inspire other youth to become the best that they
can be and showcase the best of the Filipinos in the world stage.
PAL Foundation provides travel assistance to underprivileged but outstanding
Filipinos who represent the country for global competitions in the fields of sports,
arts, academics, etc.
ANGELS WALK FOR AUTISM Last January 26th , PAL supported The Angels Walk for
Autism 2020. The event was held in MOA Arena and was spearheaded by Autism
Society Philippines. It is an annual advocacy event that has been held since 2007.
The activity aims to increase public awareness, private sector involvement and
inclusion of the autism agenda in government social development initiatives.

Report Values
64
Victims of Calamities, Elderly Persons

The Foundation makes use of the airlines’ transport capacity to help residents
of disaster-stricken communities by airlifting essential medical supplies as well
as relief goods to neglected and disaster-affected areas. In 2020, it transported
and distributed donations to the victims of typhoons Ulysses and Rolly in Bicol
and victims of Taal volcano eruption in Batangas.
HOPE CARAVAN Last January 2020, Asia Brewery and Tanduay, along with
Philippine Airlines (PAL) and the Tan Yan Kee Foundation, held relief operations in
Barangays Pook Lian and Malaruhatan in Lian and Barangay Banilad in Nasugbu
for two days. The provincial government in Nasugbu has commended and
thanked the efforts of the Group, which was among the first companies to
respond and provide the much-needed help to almost 700 evacuees.
RELIEF OPERATIONS FOR TYPHOON ULYSSES Last November 2020, PAL express
donated boxes of relief good to our kababayans in Isabela and Cagayan who were
affected by Typhoon Ulysses. The donations were turned over to the Philippine
Coast Guard Aviation Force for immediate action in Humanitarian Assistance and
Disaster Relief.

Report Values
65
Indigent patients Indigenous community
Through its Medical Travel Grant program, the PAL Foundation, in partnership with The Foundation, which is also involved in various environmental protection
medical organizations including the Philippine Heart Center, helps bring patients with programs like the preservation of the Philippine Eagles and its habitat at
serious conditions (heart disease, craniofacial defects, etc.) and their escorts to where Mount Apo in Davao, also aims to help provide sustenance to the
they will be provided with free medical treatment in the Philippines and abroad. The Indigenous Peoples’ communities living within the forest.
PAL Foundation also transports medical volunteers to serve several underserved
communities in the country. In partnership with Make a Wish Foundation, PAL
Foundation also helps fulfill the wishes of sick children by arranging special activities
for kids who dream of becoming a pilot or cabin crew. The activity includes a visit in
actual PAL aircraft and flight simulator at the Maintenance Base Center in Nichols and
personal encounter with pilots and cabin crew.
PROJECT WHEELCHAIR TURNOVER PAL transported 36 wheelchairs and

360 hygiene kits for the City of Marawi via PR 2529, a Manila to Cagayan
de Oro flight last 12 October 2019. The cargo forms part of the donation of
the Makati Medical Center Foundation(MMCF) for the City of Marawi.
PAG-ASA ONE FLIGHT PAL express welcomes angel visitors from Shelter of Hope. More
than 20 cancer patients aged two (2) to twenty (20) were warmly welcomed to PALex
by volunteers from HR, IFSTD, Flight Ops, Treasury, Aircraft Maintenance Department,
Security and Safety for the aircraft familiarization tour/experiential learning activity.
The learning activity is part of the PALex E=MC2 (Employee-Management Cooperation
and Collaboration) CSRs which varies from outreach activities, Brigada Eskwela,
donation/relief drive, to granting requests from institutions serving people with special
needs.

Report Values
66
Base of the pyramid Child welfare, education
For its annual Christmas activities, the Foundation organizes gift-giving programs The Foundation is a regular supporter of the advocacies of media networks GMA
for neglected children. In the recent years, the Foundation, in partnership with and ABS-CBN. It provided support to GMA Kapuso Foundation’s Unang Hakbang
SKAL Makati, organized Christmas gift-giving programs for orphans and street sa Kinabukasan project, an initiative to help parents from impoverished
kids under the care of Food for the Hungry Philippines, Children’s Joy communities provide for their children’s school requirements; and ABS-CBN
Foundation, Virlanie Foundation, etc. Lingkod Kapamilya Foundation’s Bantay Bata program that helps protect
disadvantaged and at-risk children.
The Foundation also partnered with Habitat for Humanity Philippines to help
improve the living conditions of informal settlers living in high-risk areas in the
country.
RELIEF OPERATION PAL express joined by the Philippine Army and the Armed
SHARING CHRISTMAS JOY PAL Express, along with other government agencies Forces of the Philippines, conducted a relief operation for COVID-19 affected
and private groups and organizations, spearheaded a gift-giving program for the individuals at the Philippine Army Gymnasium last June 27, 2020. They managed
children of the Saint Rita Orphanage in Paranaque. Toys, toiletries, food packs, to feed 365 individuals affected by the pandemic and donated boxes of PPEs to
new clothes and other essential supplies were given to the children and the staff our troops in the Philippine Army Reserves.
as part of the traditional yuletide season of giving despite the pandemic.

Report Values
67
ALAY SA OFWs
PAL President, Mr. Gilbert Santa Maria turned over the Lucio Tan Group’s (LTG)
donations to Department of Foreign Affairs Undersecretary Sarah Arriola for the
Overseas Filipino Workers (OFW) residing in Lebanon on September 24, 2020. The LTG
donated 27,500 face shields, 3,000 boxes of disposable masks and 1,000 boxes of
Vitamin C which were carried in PAL’s repatriation flight to Lebanon and was turned
over to the Philippine Embassy in Beirut.
The Lucio Tan Group also distributed 100 cases of Cobra Energy drinks, 100 cases of
bottled iced tea, 1,870 cases of Bi-frutas pineapple mango, 50 cases of Vitamilk Banana,
50 cases of Summit bottled water to arriving OFWs of PAL repatriation flights from
Lebanon.

Report Values
68
Material Topic
Disclosure Index
SEC Guidelines GRI Sustainability Topics Sustainable Development Relevant section(s) Page remarks
Equivalent Goals Alignment
Governance
GRI 408 Compliance with laws and Compliance with laws and regulations, Workplace p. 27
GRI 409 regulations conditions, labor standards and human rights – labor laws
and human rights
GRI 407 Effective, accountable, and Labor-management relations p. 29
GRI 405 transparent governance Diversity and equal opportunity p. 31
Economic
Economic Performance GRI 201 Direct economic value generated Direct economic value generated and distributed p. 22
and distributed
Environment
Resource Management GRI 302 Energy Resource Management, Energy consumption (electricity) p. 55
Resource Management, Energy consumption (Jet A-1) p. 56
Resource Management, Energy consumption (Diesel and p. 56
GRI 303 Water Gasoline)
Resource Management, Water consumption p. 57
Environmental Impact GRI 305 Greenhouse Gas Emission Environmental impact, Greenhouse gas emission p. 58-59
GRI 306 Solid and Hazardous Waste Environmental impact, Solid waste p. 60
Environmental impact, Hazardous waste p. 61
GRI 306 Effluents Environmental impact, Effluents p. 61
Environmental Compliance GRI 307 Environmental Compliance Compliance with laws and regulations, Environmental p. 27
compliance
Legend:
No poverty Gender equality Decent work and economic growth Responsible consumption and production
Good health and well being Clean water and sanitation Reduced inequalities Climate action
Quality education Affordable and clean energy Sustainable cities and communities Peace, justice and strong institutions 70
SEC Guidelines GRI Sustainability Topics Sustainable Development Relevant section(s) Page remarks
Equivalent Goals Alignment
Social
Employee Management GRI 404 Employee training and Employee training and development p. 44-49
development
Employee Management GRI 401 Employee hiring and benefits Employee hiring and benefits p. 53
Data Security GRI 418 Data security Data security p. 32

Customer Management Customer privacy Customer privacy p. 33
Workplace conditions, labor GRI 403 Occupational health and safety Health and Safety, Occupational health and safety p. 35-37, 40
standards, and human rights
Customer Management GRI 416 Health and safety Customer complaints p. 36-43
Customer Management Customer satisfaction Customer satisfaction p. 50-52
Legend:
No poverty Gender equality Decent work and economic growth Responsible consumption and production
Good health and well being Clean water and sanitation Reduced inequalities Climate action
Quality education Affordable and clean energy Sustainable cities and communities Peace, justice and strong institutions 71
Isang taon na puno ng pagsubok
Tinahak nang walang pagsuko
Haharapin ang bukas na may…
Pag-asang Hindi Natitinag

Kapag may ipagmamalaki, ang sabi nila: “Ibandila mo!”
Ang bandila ang mukhang ihinaharap natin sa mundo
Nakamamanghang tanawin, masarap na pagkain
Palakaibigang tao, makulay na kultura
Sa digmaan, ang tagahawak ng watawat ang nasa unang hanay

May bitbit na inspirasyon
At para sa kalabang walang anyo, hugis o mukha
Ang inspirasyon ay mabisang sandata
At hindi namin itinigil ang pagwagayway

Bumagal man ang ikot ng mundo
Kumulimlim man ng bahagya ang langit
Mahahawi pa rin ang ulap, at sisikat pa rin ang araw
Ganyan ang Pilipinas, at ganyan ang Pilipino

Gaya ng bandila patuloy na lilipad
Patuloy ang pagsulong sa kinabukasan
Patuloy na mananalig
Kasama ang pag-asang hindi natitinag
Matapos man ang unos, iwawagayway pa rin ang bandila

Para sa bansang minumutya
Philippine Airlines, Ang Puso ng Pilipino
Video Commercial Link:

https://fb.watch/4NqzuwPBdK/ 72
PAL Holdings, Inc.
Sustainability Report 2020

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COVER SHEET

AUDITED FINANCIAL STATEMENTS

SEC Registration Number

PRINCIPAL OFFICE ( No. / Street / Barangay / City / Town / Province )

CONTACT PERSON INFORMATION

CONTACT PERSON’s ADDRESS

7/F Allied Bank Center, 6754 Ayala Avenue, Makati City

SEC FORM 17-A

1. For the calendar year ended December 31, 2020

2. SEC Identification Number PW- 94

3. BIR Tax Identification No. 000-707-922-000

4. Exact name of registration as specified in its charter PAL Holdings, Inc.

10. Securities registered pursuant to Section 8 and 12 of the SRC

Number of Shares of Common Stock

Common Stock 11,610,978,242 shares

Philippine Stock Exchange Common Stock – 10,502,320,021 shares

13. Aggregate market value of the voting stock held by non-affiliates:

DOCUMENTS INCORPORATED BY REFERENCE

(a) Any annual report to security holders

(b) Any information statement filed pursuant to SRC Rule 20

(c) Any prospectus filed pursuant to SRC Rule 8.1

PART I - BUSINESS AND GENERAL INFORMATION

PART II - OPERATIONAL AND FINANCIAL INFORMATION

Item 5. Market for Registrant’s Common Equity and Related Stockholder

PART III - CONTROL AND COMPENSATION INFORMATION

Item 9. Directors and Executive Officers of the Registrant 36

PART IV - CORPORATE GOVERNANCE AND SUSTAINABILITY REPORT

Item 13. Corporate Governance 42

PART V- EXHIBITS AND SCHEDULES

Item 15. Exhibits and Reports on SEC Form 17-C 43

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND

Philippine Airlines, Inc.

Zuma Holdings and Management Corporation

Net Revenues by Route

2020 2019 2018

International Passenger Services

Asia and Oceania

Domestic Passenger Services

Traffic revenue amounting to P

Joint Services and Code Share Agreements

Frequent Flyer Programs

(ii) Distribution Methods of Products or Services

(iii) Status of any Publicly-announced New Product or Service

PAL's Market and Capacity Share:

Market Capacity Airline Competitors

Middle East 31% 31% Cebu Pacific, Emirates, Saudi Arabian

United Kingdom 31% 33% Emirates, Qatar Airways, Etihad Airways,

Asia and Australia 27% 29% Legacy Carriers:

A comprehensive restructuring including the implementation of Manpower Reduction Program

(vii) Transactions with and/or dependence on related parties

(viii) Patents, trademarks, licenses, franchises, concessions, royalty, agreements or labor

a. corporate income tax based on net taxable income; or

a. corporate income tax based on net taxable income; or

(ix) Need of any government approval of principal products or services

(x) Effects of existing or probable government regulations on the business

(xii) Cost and effects of compliance with environmental laws

Cost for Renewal of Permit to Operate Air Pollution Source Installation - P

Cost for Renewal of Discharge Permit- P=48,295.00

3. Presidential Decree No. 1586, “Establishing an Environmental Impact Assessment System”,

No cost to PAL for 2020.

5. Presidential Decree No. 1067, “The Water Code of the Philippines”

Cost for the renewal of Water Permit: P

6. Republic Act 9003 “The Ecological Waste Management Act of 2000”