A Younger Philippine Airlines

Goodbye aging Boeing 747-400! It's time to go.
Goodbye aging Boeing 747-400! It’s time to go.

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.

Source: Daxim Lucas, Philippine Daily Inquirer