PAL says refleeting program to sustain profitability

Flag carrier Philippine Airlines (PAL) is placing its money where its mouth is, saying its fleet modernization program can sustain the positive results it achieved in the fiscal first quarter ending June.   “We are confident that the company’s first quarter earnings can be sustained,” PAL president and chief operating officer Ramon Ang told reporters after signing a $7-billion deal with Airbus on Tuesday.   Back on the black in its fiscal first quarter, PAL Holdings Inc. posted a net income of P489.2 million from a P475.1 million net loss a year earlier.   Revenues rose 5.8 percent to P20.783 billion – from P19.641 billion –helped by higher passenger traffic and lower cost of aviation fuel.   “With the proper use of equipment, we are confident that the company will deliver a very good financial performance this year,” Ang said.   The PAL official said the airline is aggressively pursuing its modernization program and is buying 100 new aircraft to shore up its fleet of 39.   PAL on Tuesday signed a contract with Airbus 54 single aisle A321s and widebody A330-300s, the first batch of which will be delivered early next year.   The A321s would serve PAL’s domestic and regional routes and the A330s would serve regional routes and the Middle East and Australia.   The deal worth $7 billion is the biggest aircraft deal in the Philippines, according to PAL.   The acquisition will be funded by a syndicated loan headed by the European Eximbank.   The Airbus contract paves the way for PAL to buy another 10 A321 new engine option and a two A330s worth $4.5 billion, Ang said.     Ang noted the $500 million in fresh equity infused by diversified conglomerate San Miguel Corp. through San Miguel Equity Investments Inc. would sustain operations for now.   The equity gave San Miguel control to about 49 percent of Trustmark Holdings. Trustmark and affiliate Zuma Holdings own PAL Holdings and budget airline AirPhil Express.   “That equity is more than enough at the moment. We don’t need to get more equity but if ever we need more funding, our existing shareholders are willing to infuse more equity,” Ang said.   Ang and PAL chairman Lucio Tan said the refleeting program is in line with efforts to strengthen the flag carrier and help boost the Philippine economy.   “The orders we are placing with Airbus will play a key role in revitalizing PAL and growing trade and tourism in the country,” they said in a statement.   The additional aircraft would allow PAL to offer more passengers the best the industry has to offer across Asia-Pacific, and help PAL lower its operating costs and reduced its carbon footprint.   Ang said the modernization program also covers the requirement of AirPhil Express so the airline does not intend to sell its old aircraft at the moment.   PAL is still in talks with other aircraft manufacturers, including Boeing for the acquisition of 46 more aircraft, he added. — VS, GMA News