PAL adds 2 new Airbus planes

MANILA, Philippines - Flag carrier Philippine Airlines Inc. (PAL), jointly owned by taipan Lucio Tan and diversified conglomerate San Miguel Corp. (SMC), has beefed up its fleet to 48 with the arrival of two new Airbus aircraft as part of a comprehensive fleet renewal program.

Based on its latest corporate profile, PAL now operates 39 Airbus and nine Boeing planes as it continued to replace old aircraft with new ones under its massive refleeting program.

Its Airbus fleet consists of 10 Airbus 330-300 with a capacity of 302 passengers each, 12 A320-200 with 150 to 156 passengers each, eight 340-300 with 264 passengers each, five A321-231 with 199 passengers each, and four A319-100 with 134 passengers each.

On the other hand, its Boeing fleet is composed of five 777-300ER that can carry 370 passengers each and four 747-400 with a capacity of 427 passengers each.

The carrier did not renew the lease of at least seven aircraft.

Upon the entry of SMC in April last year, PAL had embarked on ambitious refleeting program involving the acquisition of 100 new fuel-efficient aircraft to bring down maintenance as well as fuel costs aimed at bringing the airline back to profitability.

It entered into a $7-billion deal with Toulouse-based EADS in August last year to acquire 55 new Airbus aircraft consisting of 45 single-aisle A321 and 10 wide-body A330 planes. This was regarded as the largest aircraft purchase in Philippine history.

The airline also exercised an option to acquire 10 more A330-300 planes in another contract worth about $2.5 billion in September last year, bringing the total orders to a record 65 aircraft.

PAL expects to take the delivery of 13 aircraft this year, 17 in 2014, 15 in 2015, 10 in 2016, two in 2017, four in 2018 and four in 2019.

PAL president and chief operating officer Ramon S. Ang earlier said the airline is looking to return to profitability in 2014 with its ongoing fleet renewal program.

Ang, who is also president and chief operating officer of SMC, said PAL hopes to cut by half its losses this year on the back of the acquisition of fuel efficient aircraft as well as the introduction of additional long-haul routes.

“By next year, PAL will earn money,” Ang stressed.

With the new aircraft, PAL hopes to save as much as $400 million or about 20 percent of the average revenues of about $2 billion by reducing the share of fuel and maintenance costs to total revenues down to about 40 percent from the current level ranging between 55 percent and 60 percent.

Last Aug. 1, PAL transferred bulk of its domestic flights to sister firm PAL Express through an expanded code sharing arrangement to focus on international destinations, particularly Europe and the US.

PAL is set to launch direct Manila – London flights on Monday as its first foray in European airspace after the European Union lifted a ban last July 12 that prevented the airline from mounting flights to Europe.

It is awaiting the upgrade of the country’s status back to Category 1 by the US Federal Aviation Administration (FAA) to allow PAL to mount additional flights to the US. The country’s status was downgraded to Category 2 in 2008 preventing airlines from the Philippines from expanding operations in the US.

PAL currently flies an average of 23,000 passengers per day and has serviced 300 million passengers over the last seven decades. It has an average of 164 domestic flights and 73 international flights per day.

SMC infused $500 million to acquire a 49 percent stake in PAL in April last year after Trustmark Holdings entered into investment agreements with SMC’s San Miguel Equity Investments Inc. (SMEII) for a 49 percent stake in PAL Holdings.