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PAL acquiring new planes

Airline moving to expand services to US, Europe

PHILIPPINES Airlines is expecting to close a deal for the acquisition of six “or more” long-range Airbus A350s or Boeing 787s this year, in line with a plan to phase out its fleet of ageing Airbus A340s, its top official said on Friday.

Jaime Bautista, president of Philippine Airlines, told reporters that the carrier was considering selling its six A340s, which are four-engine planes that burn more fuel and require slightly higher maintenance spending, once the newer aircraft arrive within the next three to four years.

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Bautista said the new aircraft would allow Philippine Airlines, which is controlled by tycoon Lucio Tan, to expand its operations in the profitable United States and Europe routes. PAL currently flies to New York, San Francisco and Los Angeles in the US and to London, its only destination in Europe.

“We are now in the process of evaluating which aircraft we will choose to replace the Airbus A340s. The decision most probably [will be made] within the year,” Bautista said at the sidelines of the annual meeting of Tan’s airline services firm MacroAsia Corp. on Friday.

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He said PAL would initially require six new planes but the order “might be increased to address the growth in the market.”

Bautista noted that Philippine Airlines would choose only one additional aircraft type for its long-haul operations. Apart from its Airbus A340s, PAL has a fleet of six Boeing 777 300-ERs.

Philippine Airlines announced last month that it would lease two more B777 300ERs via an agreement with Intrepid Aviation.

The move would also bolster Philippine Airlines fleet to 78 planes, the carrier said.

“If there are buyers, we can sell the Airbus A340s. They are becoming more expensive to operate, and it consumes more fuel … Maintenance is also a little bit more expensive,” Bautista said.

He estimated that the carrier could save between 20 percent and 30 percent on fuel costs, the single-biggest operating expense for airlines, if it would replace the older aircraft type with the newer long-range planes.

Big plane markers like Airbus have been placing more focus on markets in Asia, which it said would account for about 36 percent of global passenger traffic over the next two decades. At present Asia accounts for 30 percent of global passenger traffic.

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Airbus flew its A350 XWB to Manila in May, as part of a worldwide demo of its newest generation long-range aircraft.

Philippine Airlines earlier announced a turnaround in first quarter 2015 earnings, as it posted a net comprehensive income of $85 million against a $20.7 million net loss incurred in the same period last year.

In a filing with the Securities and Exchange Commission, PAL reported that total revenue from January to March 2015 increased by 30 percent to $627 million, from $482.4 million in the same period last year.

This was attributed mainly to an increase in passenger traffic after new international destinations were opened and the expansion of the domestic route network following an enhanced commercial arrangement with PAL Express, the carrier said.

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TAGS: Airbus A350s, Airline industry, Business, economy, News
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