PAL flew almost 12M passengers in 2014

Philippine Airlines FILE PHOTO

FLAG carrier Philippine Airlines carried more passengers in 2014 as its fleet expanded under the previous management and it added new routes.

PAL president Jaime Bautista told reporters last week that the carrier flew close to 12 million passengers last year.

This was a 7-percent increase from the 11.2 million passengers that the PAL group flew in 2013, according to data from the Civil Aeronautics Board.

PAL is now led by tycoon Lucio Tan after he bought San Miguel Corp.’s 49-percent stake for over $1 billion in September last year.

Bautista noted that PAL took delivery of additional aircraft in late 2014, the effect of which the airline would fully recognize in 2015.

“We should be able to grow the market [this year],” said Bautista, adding that PAL usually grows volume in line with the broader economy, as measured by gross domestic product. PAL is adding new routes this year, including flights from Manila to New York by March.

Despite recovering volume, PAL has been a money-losing business in recent years, partly due to fierce competition from rivals like budget carrier Cebu Pacific Air.

Lance Gokongwei, Cebu Pacific CEO, said the carrier flew almost 17 million people in 2014, bolstered by the acquisition of the domestic unit of Singapore’s Tiger Airways early last year.

Bautista said it was uncertain if PAL would be able to post a profit in 2014.

But he did note that December, marked by the Christmas and New Year holidays, was “a very profitable month”.

“We added more flights based on the requirement of the market but I am not sure yet whether we will record a profit or not [ in 2014],” Bautista said.

He noted that fuel costs, typically an airline’s single-biggest operating expense, had gone down significantly since 2014.

However, an improvement here was likely offset by the government’s recent order to scrap the surcharge on fuel that airlines included in the ticket price.

PAL is in the midst of talks with France-based plane manufacturer Airbus for the deferral of plane orders made by SMC.

For 2015, Bautista said PAL was originally supposed to take delivery of 10 mid-range Airbus planes,  but this was reduced to five aircraft.

The total remaining orders for 38 Airbus planes would be delivered on a staggered basis, pushing back full delivery to 2024 instead of 2020 originally, Bautista said.

The deferrals came as Tan’s group took a more conservative expansion approach, in contrast to SMC’s aggressive plans.

Bautista said PAL had a fleet of 72 planes, including six Boeing 777 300ERs, which it uses for flights to the mainland United States, its most profitable route.

The revised fleet plan was a key consideration in mapping out PAL’s new business strategy, which includes taking a potential strategic investor within three years, Bautista said.