Regional airline remains in PAL acquisition list

By Zinnia B. Dela Peña, The Philippine Star

Posted at Oct 01 2012 08:10 AM | Updated as of Oct 01 2012 11:13 PM

MANILA, Philippines - Philippine Airlines remains keen on acquiring a regional airline even as it embarks on a massive refleeting program, according to a top company official.

PAL president Ramon S. Ang said investing in a foreign carrier continues to be a part of the company’s growth plan as it seeks to reach new skies and reclaim the top spot in the local aviation industry.

When asked whether there were ongoing negotiations with a regional airline, Ang said in a mobile phone message: “Yes but very sensitive issue, can’t say anything else.”

PAL, which grapples with high fuel prices and stiff competition from its main rival, budget carrier Cebu Air, is overhauling its fleet to meet higher demands of airline travellers.

It also plans to introduce new flights to new destinations including the Middle East, Europe and other parts of the United States to expand its global reach and swing to profitability in two years time.

PAL is currently blacklisted from flying to the 27-member European Union due to its failure to comply with international safety standards.

Un­der the Philip­pines’ cur­rent cat­e­gory 2 sta­tus, the flag carrier is also pro­hib­ited from mount­ing ad­di­tional flights to US des­ti­na­tions.

Ang, who is also president of highly-diversified conglomerate San Miguel Corp., said the aggressive re-fleeting program would help PAL bring down maintenance and fuel costs by as much as 20 percent.

San Miguel took over management of the flag carrier in April by acquiring a 49-percent stake in PAL in in a deal worth about $500 million, marking its first foray into the airline business.

PAL is currently focused on rebuilding its fleet with plans to acquire 100 new airplanes in the next five to seven years. San Miguel expects PAL to start contributing to its bottom line by next year.

In August, PAL entered into a $7-billion contract with Airbus for the acquisition of 54 aircraft comprising 34 A321ceo, 10 A321neo, and 10 A330-300s, targeted for delivery starting next year. These planes will be deployed to the carrier’s regional and mid-range flights including its expected re-entry to the Middle East market.

PAL is also buying another 10 wide-bodied jets with a list price of $250 million each from European Aeronautic Defence and Space Co. NV.

The bal­ance of the 100-plane ac­qui­si­tion plan is ex­pected to go to Air­bus’ ri­val, Boe­ing, in an­tic­i­pa­tion of the coun­try be­ing re­stored to Cat­e­gory 1 sta­tus by the US Fed­eral Avi­a­tion Ad­min­is­tra­tion.

PAL currently maintains and operates 39 aircraft comprising of five Boeing B747-400s and three B777-300ERs as well as four Airbus A340-300s, eight A330-300s, 15 A320-200s, and four A319-100s.

San Miguel and the group of taipan Lucio Tan are considering building a major new airport in the country that might cost $5 billion to $6 billion.