PAL mulls Boeing offer for 4 long-haul aircraft

MANILA, Philippines - Flag carrier Philippine Airlines Inc. (PAL) of taipan Lucio Tan is looking into the proposal of Boeing for the supply of four long-haul aircraft as part of the airline’s massive fleet renewal program.

PAL president and chief operating officer Jaime Bautista said the Tan Group is studying the proposal given by Boeing to the previous management of the airline under diversified conglomerate San Miguel Corp. (SMC).

“Boeing has given us a proposal but we’ll have to review this very carefully. Actually the proposal was sent to the previous management and we have not acted on it,” Bautista said.

According to him, the Boeing 777s are fuel-efficient aircraft that could improve the profitability of the national flag carrier.

“Well the Boeing 777s are very efficient for long haul operations,” he added.

Bautista was reelected president of PAL last Oct. 23 replacing SMC president and chief operating officer Ramon S. Ang.

PAL currently has six Boeing 777-300 ER after retiring the Boeing 747-400 previously used to major destinations in the US, Europe, Middle East, and Southeast Asia.

Under the long-term plan of the Tan Group, Bautista said the flag carrier is looking at acquiring long-range aircraft such as the Airbus A350 available in 2018 and the Boeing 777-300X available in 2021 that would allow PAL to fly non-stop to long-haul destinations such as New York.

“The long term plan involves the acquisition of aircraft that can fly long haul. Right now we have only 12 aircraft that can fly long haul,” he added.

By that time, Bautista said the airline would have taken in a foreign strategic partner who could help finance the acquisition of new long-haul aircraft.

He revealed last Friday that the Tan Group is looking at taking in a strategic partner who could take as much as a 40 percent stake in PAL as allowed by Philippine laws over the medium term or two to three years.

PAL has so far entered into code-share agreements with Etihad Airways and All Nippon Airways (ANA).

“There are names that we are looking at but we are not at liberty to discuss that at this time,” he said earlier.

The Tan Group, through Buona Sorte and Horizon Global Investments, bought back the 49 percent interest of SMC’s San Miguel Equity Investments Inc. (SMEII) last Sept. 15 for $1.3 billion.

It would be recalled SMEII bought a 49 percent stake in Trustmark Holdings Corp. in April 2012 for $500 million. Trustmark owns and controls 89.78 percent of the issued and outstanding shares of PAL Holdings that owns 98.27 percent of PAL.

The Tan Group is now undertaking a review of the $10 billion deal entered into by the SMC Group for the acquisition of 65 brand new Airbus aircraft.

PAL took the delivery of six Airbus A340-300 ex Iberia aircraft currently being used for flights to Los Angeles, San Francisco, Vancouver, London, Sydney and New York via Vancouver starting March 15.

The airline would have 15 A330-300 aircraft within the year and is scheduled to take delivery of 10 A321 next year, and another 10 A321 in 2016 to cover more domestic and regional destinations.

Aside from the planned return to New York via the John F. Kennedy airport, where there is a potential market of 500,000 Filipinos after 18 years, Bautista said PAL has also beefed up its operations in Honolulu, Guam, Los Angeles, and San Francisco.

However, he said PAL would continue to look for opportunities in the US after the country’s aviation safety rating was upgraded by the US-Federal Aviation Administration (US-FAA) back to Category 1 last April after being downgraded to Category 2 in 2008.

Furthermore, he revealed that PAL would also be more aggressive in the domestic market including returning to its Cebu hub as budget airline Cebu Pacific has taken a 40 percent slice of the market, while the national flag carriers’ market share fell below 40 percent.