PAL Reloaded

PAL firms up domestic re-fleeting plan
Inquirer News Service

PHILIPPINE Airlines (PAL) has firmed up its plan to upgrade 13 of its aircraft for domestic flights after signing a contract to lease three more Airbus A-320 planes, PAL president Jaime Bautista said Thursday.

With the contract, PAL will have six leased A-320s, the last of which will arrive in February, Bautista said.

It has 30 planes for local and international flights.

PAL will spend about $65 million to modernize its domestic fleet, he said, explaining that the amount would cover the spare parts provisioning required by the leasing company.

"We have a commitment already with a leasing company," told the Inquirer after PAL's annual meeting of stockholders Thursday. "Between now and 2008, we will be modernizing our domestic fleet with new leases of the same type of aircraft."

With the economic outlook uncertain because of surging petroleum prices, PAL, controlled by tobacco tycoon Lucio Tan, has thought it wise to enter into five-year leasing agreements instead of buying new planes, Bautista said.

PAL's competitor Cebu Air Pacific, controlled by the family of diversified tycoon John Gokongwei, has bought 12 new Airbus 319 planes for $500 million. It has also leased two new A-320s for major domestic routes, such as between Manila and Cebu City and between Manila and Davao City. The A-319s will be arriving between September this year and early 2007.

Bautista said use of newer planes would allow a faster turnaround time, which is essential in improving PAL's on-time performance.

PAL has to set aside about $5 million for the spare parts provisioning of each aircraft, Bautista said. The leasing company usually requires a provisioning of 10 percent of the value of an aircraft, which is about $40 million.

PAL reported a 73-percent increase in its net income in the April-June first quarter of its fiscal year at $27.5 million (roughly P1.5 billion), against $15.92 million in the same period of the previous fiscal year.

The April-June profit exceeded the full-year profit of about P1.2 billion in the previous fiscal year ended March 2005. Clarissa S. Batino, with INQ7.net