PAL to trim costs with new planes in 2014

MANILA, Philippines – Philippine Airlines (PAL) expects to see savings of as much as $400 million from fuel and maintenance costs when its re-fleeting program is concluded.

PAL president and chief operating officer Ramon Ang said that the airline expects to cut the share of fuel and maintenance costs to total revenues down to an estimated 40% from current levels, which range between 55% and 60%.  

Ang, who is also president and chief operating officer of San Miguel Corp., said that PAL could save at least $400 million or about 20% of the airline’s $2 billion average revenues.

Refleeting

PAL is undertaking a massive re-fleeting program with the aim of acquiring up to 100 new aircraft.

PAL has an existing fleet of 45 aircraft composed of 19 Airbus A320s, 8 A330s, 4 A319s, 4 A340s, 5 Boeing B777-300ERs, and 5 Boeing 747s.

San Miguel acquired a 49% stake in PAL’s parent firm PAL Holdings Inc. to the tune of $500 million in April 2012. PAL is also owned by tycoon Lucio Tan.  

The airline entered into a $7-billion contract with EADS Group in August 2012 for the acquisition of 54 new Airbus aircraft consisting of 34 A321ceos, 10 A321neos, and 10 A330s. It also has another $2.5 billion option to acquire 10 more A330 aircraft.

Ang said the airline expects the delivery of 8 A330s and 8 A321s in 2013 and another 18 aircraft in 2014 bringing to 72 the number of aircraft acquired over a 3-year period.

“With the arrival of the new aircraft you will see a major turnaround for PAL,” Ang told reporters.

Return to black

Ang is optimistic that PAL would get out of the red next year after successfully cutting it losses by almost half in 2013.

PAL Holdings reduced its losses by 24% to P2.74 billion in the first 9 months of its fiscal year from P3.59 billion as total revenues climbed by 2.4% to P55.68 billion from P54.38 billion from its cargo and passenger businesses. 

The re-fleeting program and the anticipated lifting of the EU and US airline bans on the Philippines are expected to boost PAL’s revenues in 2014.

PAL also recently launched several new destinations jointly with its sister company, PAL Express (formerly AirPhil Express).  

New destinations include Kuala Lumpur, Malaysia on May 2; Darwin, Brisbane and Perth in Australia on June 1; Guangzhou in China on June 2; Abu Dhabi in the United Arab Emirates on October 1; Doha in Qatar on November 1; Riyadh, Jeddah and Dammam in Saudi Arabia on December 1; and Dubai in the UAE on November 1.

“We are very confident that PAL will do very, very good in the near future because of the new routes and improved schedule,” he added.

PAL is also set to expand direct flights to Sao Paulo, Brazil via Los Angeles soon. – Rappler.com