Philippine Airlines Flight PR-105, a Boeing 747, is welcomed by a water cannon salute as it taxis on the tarmac of NAIA Terminal 1 early Monday, September 1. The Boeing 747-400, with 285 passengers on board, was on its retirement flight from San Francisco after almost 35 years in service. PAL began retiring the last remaining 747 aircraft in the fleet shortly after the US Federal Aviation Administration restored Category 1 status to the Philippines, enabling PAL to begin deploying their new modern and fuel-efficient Boeing 777 fleet to the US.
Philippine Airlines is set to retire its aging fleet of Boeing 747-400s on Monday, making way for newer, fuel-efficient Boeing 777-300ERs for its flights to the United States after the American air safety regulator lifted a multi year restriction last month.
PAL president Ramon S. Ang confirmed in a text message that the retirement ceremony for the planes, which have served as the backbone of PAL’s long-haul fleet since the early 1990s, would take place on May 12 at the Villamor Air Base in Pasay City.
PAL had four Boeing 747-400s at the end of 2013 under finance lease agreements, its annual report showed.
It was not immediately known if PAL would announce the acquisition of more Boeing 777s during Monday’s event, where Boeing officials would also be present.
Ang said previously that they were considering more 777s or Airbus 350s (which have a longer waiting list) to augment the airline’s expansion in the United States, allowed last month by the Federal Aviation Administration when it restored the Philippines’ category 1 status.
The retirement of aircraft is part of plans to make PAL more efficient as high costs and declining revenues against no-frills budget carriers continued to eat into the company’s bottomline.
Source: Miguel R. Camus, Philippine Daily Inquirer
In many ways, marketing an airline is similar to a beauty contest: age—or more specifically, the lack of it—can be a strong selling point.
This is especially true nowadays for Philippine Airlines which recently took the painful, but important decision, to write off its aging flagship, the Boeing 747-400.
The airline has four of these ‘Queen of the Skies’ aircraft acquired during its refleeting effort in the early 1990s.
But PAL recently decided to write off these 747s as part of a batch of 20 old aircraft that had become too expensive to operate and maintain. The hit to the airline’s bottomline was a one-time hit of $261 million or about P11.7 billion at current exchange rates.
(Biz Buzz learned that, were it not for this write-off, PAL would have actually reported a small profit for the first nine months of their current fiscal year.)
The gas-guzzling four-engined giants are set to be replaced on PAL’s US routes by fuel-sipping Boeing 777s, which need only two engines to make the 13-hour trans-Pacific hops.
PAL chief Ramon Ang said that the airline’s six Boeing 777s would be “enough, for now” to replace the old quad jets, but did not rule out more acquisitions in the future, especially when they launch their flights to the US East Coast.
And how would PAL dispose of its aging and fully depreciated 747s (which have, understandably, very few takers on the used plane market)? “Already sold,” revealed Ang, who described the 2013 fiscal period as a “clean-up year.” Wow.
After the refleeting program, PAL’s average fleet age would fall from around 15 years to a mere 3.5 years—one of the youngest fleets in Asia.
Well, just like in the beauty industry, everyone knows that staying young is an expensive —but often, necessary—investment.