Philippine Airlines Fleet Plan: Bombardier, Airbus or Boeing?

PHILIPPINE Airlines Inc. (PAL) plans to add eight Boeing 787 Dreamliner or Airbus A350 XWB aircraft through a lease or purchase agreement to be sealed within the year, the company’s president said.

The new jets would help the airline cut fuel and maintenance costs — its key expense items — while boosting its non-stop flights to the US and Europe from Manila, PAL President and Chief Operating Officer Jaime J. Bautista told reporters after PAL Holdings, Inc.’s annual stockholders’ meeting at the Century Park Hotel in Manila City.

The flag carrier will also buy or lease additional Bombardier turboprops in 2016 to prop up its domestic operations, he said.

With the wide-body planes, PAL will replace six of its existing Airbus A340 and “possibly” add two more to these, with delivery expected by 2017 or 2018.

“There are proposals from Airbus and Boeing but we are not yet ready to announce which airplane we will choose,” Mr. Bautista said. “It will be very efficient if we operate the same types of plane.”

In June, PAL sealed a deal to lease two Boeing 777-300ERs to bolster its long-haul operations to the US and London. Before that, PAL had just six Boeing 777-300ERs it uses for its Los Angeles and San Francisco flights, after retiring its last four-engined Boeing 747 jumbo in September last year.


That June deal brought its total fleet count to 78 — four out of five jets are Airbus, according to data from aviation think tank Center for Asia Pacific Aviation (CAPA). PAL currently serves six long-haul destinations, one in Europe and five in North America.

Meanwhile, PAL said it expects to take delivery of Bombardier turboprops one year after the order was placed.

“We have nine turboprop airplanes right now, we may replace them or add more. We are considering the same aircraft — maybe a Q300 or or Q400, or even a smaller jet that can carry 50-70 passengers,” Mr. Bautista said.

The smaller planes will address the demand for flights servicing the country’s regional airports.

“We have more than 70 airports in the Philippines and we serve only around 30 of them,” he said.

PAL anticipates “losses” in the coming months but still expects to end 2015 “profitable,” owing to encouraging first-half figures and a surge in demand by December.

In a statement released on Thursday, PAL said it posted $138 million (P6.4 billion) in net income for the January to July period. Second quarter earnings data alone were not immediately available, but the airline reported an $85 million profit in the three months ending March allowing it to remain in the black for a second straight quarter.

Its listed parent firm, PAL Holdings, saw its first-half profit surge by 946% to P5.86 billion from P560.26 million in the same period last year.

“There are months when we expect losses because of the lean season — August, September, October and November. Traditionally, airlines lose money during these months but hopefully we will reduce the losses,” Mr. Bautista said.

To minimize the impact of the lean season, PAL will “manage capacity” by reducing flights to certain destinations, such as those bound for Los Angeles.

“We are still expecting to be profitable for the full year. December will always be profitable,” Mr. Bautista said.

The major growth drivers will be passenger growth, yield improvement, and cost control programs such as efficient fuel utilization.

Within the year, PAL will close codeshare alliances with a “few” US and European carriers, in addition to its nine existing partnerships.

PAL said in its statement that competition in international routes continues to intensify and as cushion, “we need to strengthen and expand our alliances with carriers that can complement our network and passenger base.”

Source: Daphne J. Magturo, Reporter,

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