PAL seals Airbus refleeting deal

Local carrier to acquire up to 85 planes

By: Daxim L. Lucas, August 28th, 2012 06:04 AM

REFLEETING DEAL SIGNING. PAL and Airbus officials pose after the signing ceremony at Century Park Hotel, from left, PAL vice chairman and treasurer Harry C. Tan, PAL Chairman Dr. Lucio C. Tan, Airbus Senior VP for Asia Jean Francois Laval and PAL President Ramon S. Ang.

MANILA, Philippines–Philippine Air­lines has sealed a deal for as many as 85 wide- and nar­row-bod­ied jet­lin­ers from the world’s big­gest air­craft man­u­fac­turer Air­bus In­dus­trie in a trans­ac­tion that the flag car­rier is set to an­nounce Tuesday.
Ac­cord­ing to in­dus­try sources fa­mil­iar with the mat­ter, the first phase of the mul­ti­year ac­qui­si­tion spree would see PAL ac­quir­ing up to 54 air­craft (raised from an initial order of 35) from the Euro­pean plane maker to boost its cur­rent fleet of 39 jets.

A report by Reuters released Tuesday pegs the total value of the deal’s first batch at $7 billion at the plane manufacturer’s list prices, although discounts for large orders are customary in the industry.

The new batch of air­craft is re­ported to in­clude up to 10 A330-300 twin-aisle jets, which will be de­ployed to PAL’s re­gional and mid-range flights, in­clud­ing its ex­pected re­turn to the Mid­dle East mar­ket.

PAL BUYS AIRBUS JETS. Philippine Airlines has inked with Airbus the biggest aircraft deal in Philippine history involving a firm order for more than 50 single-aisle and wide-body jets which are shown in this photo, with a list price of approximately US$7 billion. CONTRIBUTED PHOTO

The rest of the or­der will come in the form of sin­gle-aisle A320 jets and their higher-ca­pac­ity vari­ant, the A321, which will be used for re­gional and short-haul do­mes­tic flights.

The source added that or­ders for A320 and A321 air­craft would be in the form of Air­bus’ “neo” or New Engine Op­tion planes, which could pro­vide op­er­a­tors with as much as 20-per­cent cost sav­ings in terms of fuel con­sump­tion.

PAL se­lected the Air­bus A320­neo and A321­neo, in par­tic­u­lar, be­cause of its ef­forts to re­duce op­er­at­ing costs, es­pe­cially since fuel ac­counts for as much as 45 per­cent of the flag car­rier’s ex­penses.

The PAL-Air­bus deal was sup­posed to be an­nounced as early as last month dur­ing the bi­en­nial Farn­bor­ough Air­show in the United King­dom, but was de­layed due to last minute ne­go­ti­a­tions, ac­cord­ing to peo­ple fa­mil­iar with the deal.

Ear­lier, PAL pres­i­dent and San Miguel group head Ra­mon S. Ang said the air­line would ac­quire as many as 100 air­craft over the next few years as part of its re­fleet­ing ef­forts.

The bal­ance of the 100-plane ac­qui­si­tion plan is ex­pected to go to Air­bus’ ri­val, Boe­ing, in an­tic­i­pa­tion of the coun­try be­ing re­stored to Cat­e­gory 1 sta­tus by the US Fed­eral Avi­a­tion
Ad­min­is­tra­tion.

Un­der the Philip­pines’ cur­rent Cat­e­gory 2 sta­tus, PAL is pro­hib­ited from us­ing planes other than its cur­rent and ag­ing Boe­ing 747-400s and Air­bus A340-300s for flights to the US West Coast. The flag car­rier is also pro­hib­ited from mount­ing ad­di­tional flights to US des­ti­na­tions de­spite the grow­ing de­mand from di­rect trans-Pa­cific flights be­tween the two coun­tries.

PAL op­er­ates eight air­craft man­u­fac­tured by Boe­ing, namely three B777-300ERs and five 747-400s. It has 31 Air­bus jets in its fleet, made up of four A340-300s, eight A330300s, 15 A320-200s, and four A319s.

PAL re­cently placed an or­der for three more B777-300ERs, which can match the range of the B747, but has more ef­fi­cient fuel con­sump­tion since the for­mer model only has two en­gines com­pared to the lat­ter’s four.

Last week, PAL’s par­ent firm, PAL Hold­ings, re­ported that it had posted a com­pre­hen­sive net in­come of P489.2 mil­lion, mark­ing a sig­nif­i­cant turn­around from the P475.1-mil­lion loss in the same three-month pe­riod last year. To­tal rev­enues for the first quar­ter of the cur­rent fis­cal year amounted to P20.8 bil­lion or 5.8 per­cent higher than last year’s P19.6 bil­lion.

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