PAL eyes deal with plane maker

Flag carrier Philippine Airlines is nearing a deal to acquire a fleet of new planes that would significantly increase its capacity and allow it to better compete with local budget carriers.

PAL, now run by conglomerate San Miguel Corp., is being courted by European aircraft manufacturer Airbus and United States-based Boeing.

Ramon S. Ang, president of both PAL and San Miguel, confirmed that he was in talks with both plane makers. “We will buy airplanes soon,” he said in a text message to the Inquirer.

Last month, Ang said the airline would exercise its option to acquire two more Boeing 777-300 long-haul jets, on top of the original order for four. PAL already has three Boeing 777s in its fleet while another is scheduled to arrive in November.

Ang earlier said the airline was planning to buy as many as 100 new aircraft. PAL’s current fleet only has 39 planes. The company has yet to make a formal announcement on what planes it would acquire.

Adding 100 planes will mean PAL will have more planes than all other local airlines combined.

The massive refleeting effort would be funded with San Miguel’s recent infusion of $500 million into the airline, plus another $500 million infusion in the “near future” from San Miguel and the Lucio Tan group. Each group will raise $250 million.

Most of PAL’s wide-body jets, like the Boeing 747-400 and the Airbus A340-300, were acquired in 1994, long before the flag carrier slipped into financial trouble.

The company plans to expand its operations in North America by mounting direct flights to New York and Chicago in the United States and Toronto in Canada.

PAL is also planning a return to the Middle East and Europe.

PAL’s expansion plans would hinge on the government’s ability to restore the country to “Category 1” status with the US Federal Aviation Administration.