Philippine Airlines signs deal to acquire 85 Airbus planes

28-Aug-2012

Philippine Air¬lines has sealed a deal for as many as 85 wide- and nar¬row-bod¬ied jet¬lin¬ers from the world’s big¬gest air¬craft man¬u¬fac¬turer Air¬bus In¬dus¬trie in a trans¬ac¬tion that the flag car¬rier is set to an-nounce today.
 
Ac¬cord¬ing to in¬dus¬try sources fa¬mil¬iar with the mat¬ter, the first phase of the mul¬ti¬year ac¬qui¬si¬tion spree would see PAL ac¬quir¬ing up to 54 air¬craft (raised from an initial order of 35) from the Euro¬pean plane maker to boost its cur¬rent fleet of 39 jets.
 
A report by Reuters released Tuesday pegs the total value of the deal’s first batch at US$7 billion at the plane manufacturer’s list prices, although discounts for large orders are customary in the industry.
 
The new batch of air¬craft is re¬ported to in¬clude up to 10 A330-300 twin-aisle jets, which will be de-ployed to PAL’s re¬gional and mid-range flights, in¬clud¬ing its ex¬pected re¬turn to the Mid¬dle East mar-ket.
 
The rest of the or¬der will come in the form of sin¬gle-aisle A320 jets and their higher-ca¬pac¬ity vari¬ant, the A321, which will be used for re¬gional and short-haul do¬mes¬tic flights.
 
The source added that or¬ders for A320 and A321 air¬craft would be in the form of Air¬bus’ “neo” or New Engine Op¬tion planes, which could pro¬vide op¬er¬a¬tors with as much as 20-per¬cent cost sav¬ings in terms of fuel con¬sump¬tion.
 
PAL se¬lected the Air¬bus A320¬neo and A321¬neo, in par¬tic¬u¬lar, be¬cause of its ef¬forts to re¬duce op¬er¬at-ing costs, es¬pe¬cially since fuel ac¬counts for as much as 45 per¬cent of the flag car¬rier’s ex¬penses.
 
The PAL-Air¬bus deal was sup¬posed to be an¬nounced as early as last month dur¬ing the bi¬en¬nial Farn-bor¬ough Air¬show in the United King¬dom, but was de¬layed due to last minute ne¬go¬ti¬a¬tions, ac¬cord¬ing to peo¬ple fa¬mil¬iar with the deal.
 
Ear¬lier, PAL pres¬i¬dent and San Miguel group head Ra¬mon S. Ang said the air¬line would ac¬quire as many as 100 air¬craft over the next few years as part of its re¬fleet¬ing ef¬forts.
 
The bal¬ance of the 100-plane ac¬qui¬si¬tion plan is ex¬pected to go to Air¬bus’ ri¬val, Boe¬ing, in an¬tic¬i¬pa-tion of the coun¬try be¬ing re¬stored to Cat¬e¬gory 1 sta¬tus by the US Fed¬eral Avi¬a¬tion
Ad¬min¬is¬tra¬tion.
 
Un¬der the Philip¬pines’ cur¬rent Cat¬e¬gory 2 sta¬tus, PAL is pro¬hib¬ited from us¬ing planes other than its cur¬rent and ag¬ing Boe¬ing 747-400s and Air¬bus A340-300s for flights to the US West Coast. The flag car¬rier is also pro¬hib¬ited from mount¬ing ad¬di¬tional flights to US des¬ti¬na¬tions de¬spite the grow¬ing de-mand from di¬rect trans-Pa¬cific flights be¬tween the two coun¬tries.
 
PAL op¬er¬ates eight air¬craft man¬u¬fac¬tured by Boe¬ing, namely three B777-300ERs and five 747-400s. It has 31 Air¬bus jets in its fleet, made up of four A340-300s, eight A330300s, 15 A320-200s, and four A319s.
 
PAL re¬cently placed an or¬der for three more B777-300ERs, which can match the range of the B747, but has more ef¬fi¬cient fuel con¬sump¬tion since the for¬mer model only has two en¬gines com¬pared to the lat¬ter’s four.
 
Last week, PAL’s par¬ent firm, PAL Hold¬ings, re¬ported that it had posted a com¬pre¬hen¬sive net in¬come of 489.2 mil¬lion pesos (US$11.5 million), mark¬ing a sig¬nif¬i¬cant turn¬around from the 475.1-mil¬lion peso loss in the same three-month pe¬riod last year. To¬tal rev¬enues for the first quar¬ter of the cur¬rent fis¬cal year amounted to 20.8 bil¬lion pesos or 5.8 per ¬cent higher than last year’s 19.6 bil¬lion pesos.