FLAG carrier Philippine Airlines (PAL) and French aircraft maker Airbus have agreed to revise the Filipino firm’s multibillion-peso plane-acquisition deal, aiding the locally listed company’s efforts to recover from years of bleeding.
In an e-mailed statement, the airline of tycoon Lucio C. Tan said the two companies have “finalized an agreement” covering the realignment of its plane orders: the acquisition of two more Airbus A321 NEOs and the amendment of its supposed purchase of 10 Airbus A330s to
single-aisle A321 NEOs.
“The delivery schedules for 10 of the existing aircraft on order have been revised by mutual agreement with Airbus. This increases the carrier’s outstanding orders for Airbus single-aisle aircraft to 40 for delivery from 2015 to 2024,” the statement read.
Currently, the legacy carrier’s fleet is at 75 aircraft, composed of a mix of Airbus, Boeing and Bombardier planes, both wide- and narrow-bodied planes.
“The A321 NEOs will enable PAL to continue to grow its current
single-aisle fleet, and spread out its aircraft delivery stream in line with market growth,” the statement added.
The revision of its order from Airbus—from wide-bodied to single-aisle planes—is in line with the current management’s position of delaying its European expansion. The Airbus A321 NEO is typically utilized for short- to medium-haul direct flights, while the larger Airbus A330 is used for long-haul flights.
PAL President Jaime J. Bautista said in an earlier interview that his company’s “cautious and conservative” stance in expanding to Europe is backed by “stiff competition” with Gulf carriers. For now, he said, the airline will focus on other destinations, while continuing its only European destination: London.
Before the group of Tan—one of the Philippines’s billionaires—re-entered PAL in the latter part of 2014, the management of the airline, headed by San Miguel Corp. (SMC) President Ramon S. Ang, planned to expand the carrier’s route network to European destinations such as Rome, Amsterdam and France. This, however, will not happen in short term, especially with the aircraft acquisition-realignment deal. The total order, which was placed in 2012, involves 67 brand-new aircraft, composed of a mix of single-aisle and wide-bodied planes.
The massive refleeting plan was launched by SMC three years ago, as part of its initiative to expand its route network and improve its services. It exited the carrier in 2014, after Tan bought back the shares held by the food-to-infrastructure firm for roughly $1 billion.
PAL Holdings Inc. saw losses narrowing in the third quarter of 2014, driven by a spike in revenues that slightly offset an increase
in expenses. The company trimmed its losses significantly to P322.16 million in the third quarter of 2014 from P1.16 billion in the same three months the year prior.
In the same comparative periods, the firm’s revenues increased to P25.03 billion from P18.02 billion, while expenses surged to P25.16 billion from P20.07 billion.
Shares of PAL Holdings ended Friday’s trading at P4.60 apiece, higher by 1.1 percent than Thursday’s closing.