PAL invests in long range aircraft with $500-M outlay

FLAG carrier Philippine Airlines (PAL) is setting aside at least $500 million next year to acquire new planes, including long-range Boeing 777300-ERs, as it anticipates continued strong demand for air travel.

PAL president Jaime Bautista said the budget, which could expand to $700 million, would also be used to purchase five Airbus A321s and two Boeing 777s.

He said the firm is also expected to make a decision within the year on a separate order for either Airbus A350s or Boeing 787.

“We are waiting for them [Airbus and Boeing] to make their final and best proposals,” Bautista said last week.

PAL was mulling several fund-raising options, including taking on a strategic partner or the sale of shares by parent PAL Holdings Inc., which is listed on the Philippine Stock Exchange.

“Of course, we still prefer a strategic partner,” Bautista said, adding the carrier was also interested in growing its network.

For next year’s capital spending, Bautista said PAL may tap the debt market.

“The financing of the airplanes will not be a problem. There are many companies who will be willing to finance us especially if you are a profitable airline,” Bautista said.

Carriers like PAL have benefited as people travelled more and oil prices remained relatively low. Fuel costs are typically the largest component of an airline’s operating expense.

The carrier, controlled by tycoon Lucio Tan, had said these factors helped bolster PAL’s bottom-line in the first half of 2015. It’s parent firm, PAL Holdings Inc., said net income soared to P5.76 billion from P550.5 million in the same period last year.