Lufthansa Technik bags $260-M PAL deal

Flag carrier Philippine Airlines signed a $260-million long-term agreement with affiliate Lufthansa Technik Philippines for the maintenance of the airline’s new Airbus planes.

This was disclosed yesterday by MacroAsia Corp., a listed aviation support company that owns 49 percent of Lufthansa Technik. Taipan Lucio Tan owns both PAL and MacroAsia.

PAL tapped Lufthansa Technik for a 12-year maintenance agreement for its incoming Airbus A350s and A321s, the stock exchange filing showed.

“This agreement between PAL and [Lufthansa Technik] is a testament to their solid partnership, aligned with the overall goal of delivering a better flying experience for PAL’s passengers,” MacrosAsia said in its filing.

It noted that Lufthansa Technik had been preparing for the arrival of the new planes as early as 2016. The company, it said, would invest $15 million “to cover the training of mechanics, facility adjustments and for tooling and materials.”

PAL is taking delivery of four A350-900s, six Airbus A321neos and five Bombardier Q400s in 2018. This will bring its fleet to 98 planes by the end of the year.

PAL earlier ordered 21 A321neos and six A350s. It said the A321s would be used to service its Australia and Asia routes while the A350s would be for flights to North America and Europe.

The fleet modernization is part of PAL’s goal to become a five-star carrier by 2020. It recently bagged four-star status following an audit by Skytrax.

PAL Holdings, the operator of PAL, posted a  P1.1-billion loss in the first quarter of 2018 as the higher price of oil took its toll on the airline’s bottom line.

This came despite overall better demand. Total revenues hit P36.79 billion, up almost 13 percent. Passenger revenues alone amounted to P32.04 billion, up 14 percent. PAL Holdings, however, recorded a decline in cargo revenues at P2.43 billion, down 9.6 percent.

PAL ramped up operations last year, pushing up total expenses to P36.9 billion, higher by almost 14 percent.