PAL to order new planes

By Lawrence Agcaoili, The Philippine Star

Posted at May 10 2014 08:59 AM | Updated as of May 10 2014 04:59 PM

MANILA, Philippines - National flag carrier Philippine Airlines Inc. (PAL), jointly owned by taipan Lucio Tan and diversified conglomerate San Miguel Corp. (SMC), is likely to place new orders for Boeing aircraft as it is scheduled to retire 20 aircraft including its old Boeing 747 planes.

PAL president and chief operating officer Ramon S. Ang confirmed that the airline is set to decommission the aging fleet of Boeing 747 fleet.

“Yes,” Ang said in a text message when asked if PAL was retiring its fleet of Boeing 747 as it started using the more fuel efficient Boeing 777 for its flights to the US.

PAL is in the middle of a fleet renewal program involving the acquisition of 100 aircraft after SMC bought into the company in April 2012.

The airline has acquired close to 65 aircraft from Airbus worth about $10 billion and is also looking at putting up its own airport that would serve as an alternative gateway to the congested Ninoy Aquino International Airport (NAIA).

SMC’s wholly-owned subsidiary San Miguel Equity Investments Inc. (SMEII) acquired a 49-percent equity interest in Trustmark Holdings Corp. for $500 million in April last year. Trustmark owns 97.71 percent of PAL Holdings which in turn owns 84.67 percent of PAL through PR Holdings Inc.

PAL is now gearing up for flights to the US after the US Federal Aviation Administration (US-FAA) upgraded the country’s aviation safety rating back to Category 1 last April 9 after being downgraded to Category 2 in January 2008 which had prevented Philippine carriers from mounting additional flights to the US.

Currently, PAL operates a total of 26 weekly flights to the US, with frequencies to Los Angeles, San Francisco, Honolulu and Guam.

For its flights to Honolulu and Guam, PAL would continue to utilize new wide body Airbus A330-300s and single-aisle A320-200s.

PAL is initially looking at flying to New York and Chicago within the year. It used to fly to New York until 1997 after it was forced to stop due to the Asian financial crisis.

Since the entry of SMC in April 2012, PAL embarked on a massive re-fleeting program involving the acquisition of 100 aircraft. It entered into two separate purchase agreements with Airbus in August worth $7 billion for the firm order of 40 44 Airbus A320 aircraft and options for 20 Airbus A320 for delivery in fiscal years 2014 to 2020. Likewise in September PAL ordered another $2.5 billion worth of 10 Airbus A330-300 aircraft and options for 10 aircraft for delivery in fiscal years 2014 to 2016.

Based on its website, the airline has an operating fleet of 53 aircraft consisting of six Boeing 777-300ER, four Boeing 747-400, eight Airbus A340-300, 13 A330-300, 12 A320-200, six A321-231, and four A319-100.

Following the refleeting, PAL would own one of Asia ’s youngest fleet at 3.5 years with the completion of a modernization program that involves the replacement of 20 aging aircraft with modern, fuel-efficient planes.

Ang said earlier that PAL is still on track to improve the company’s financial and operational performance under an ambitious refleeting program.

“2013 was a clean-up year for PAL as we go through the costly yet necessary fleet renewal process, but we are on track with our goals and we remain committed to improving your airline’s financial and operational performance,” he stressed.

The retirement of PAL’s old fleet is part of a turnaround strategy aimed at transforming the flag carrier into Asia’s airline of choice through a simple game-changing program of fleet modernization, network expansion and service innovation.