PAL lines up measures to give bottom line a boost

Flag carrier Philippine Airlines (PAL) has lined more revenue-enhancing and cost-cutting initiatives that are expected to improve the company’s profitability in the mid to long term.

As the airline prepares to cut about 2,600 jobs in a bid to dramatically cut costs, the Lucio Tan-led airline said its measures to be implemented in the next 12 months aim to improve the quality of service as the airline competes with smaller but faster-growing budget carriers.

“The goal of PAL is to grow profitable and enhance its position as a key player in the Asian airline industry by providing a combination of superior customer service, convenient schedules and competitive fares while controlling costs,” the company said in a disclosure.

“PAL will continue rationalizing capacity allocation through matching demand with capacity by deploying aircraft accordingly,” PAL added.

PAL also said it would refurbish its fleet of four Airbus A340 long-range planes.

Together with the company’s five Boeing 747 jumbo jets, PAL’s A340s are used for flights to the United States, which is one of the most profitable destinations in the company’s operations.

PAL’s 747 aircraft were refurbished two years ago to improve their interiors. The planes were reconfigured to remove the First Class section, leaving only the Business and Economy sections.

“The reconfiguration and refurbishment program on the A340 aircraft will eliminate product inconsistencies and operational inflexibilities, and enhance the comfort and travel experience of PAL’s passengers,” the airline said in a statement.

Another measure to be implemented is the installation of a reservation, fare computation, ticketing and departure control system from Texas-based software firm Sabre Airline Solutions, a leading airline solutions provider, serving over 380 different carriers.

“This new initiative is expected to drive revenue, competitiveness and efficiency. Full implementation is expected in February 2012,” PAL said.

The Sabre system will improve PAL’s Internet booking system, which will allow the airline’s customers to book their flights without having to deal with reservations personnel or travel agents.

“Funding for the foregoing items as well as for other major initiatives will be made through additional loans,” PAL said.

Earlier this month, the Office of the President upheld the legality of PAL’s plan to shut down three departments, namely its call center reservations, in-flight catering and airport services.

The move, which has been opposed by the company’s labor union PAL Employees’ Association, will affect 2,600 of the airline’s 7,000 employees. The functions of the three departments are to be sub-contracted to SkyKitchen and SkyLogistics, owned by Cebu-based businessman Manny Osmeña, and SPi Global Holdings, a business process outsourcing firm controlled by Philippine Long Distance Telephone Co.

PAL expects to save $10 million to $15 million a year from the outsourcing plan.