Philippine Airlines defers plane orders by 4 years

MANILA, Philippines - National flag carrier Philippine Airlines Inc. (PAL) has decided to extend the delivery of close to 40 aircraft by four years.

PAL president and chief operating officer Jaime Bautista told reporters yesterday at the airline’s headquarters in Pasay City that it has deferred the delivery of the aircraft to 2024 instead of 2020.

Bautista said the airline is supposed to take the delivery of the remaining 38 Airbus A321 aircraft until 2020.

For this year alone, he pointed out that PAL is scheduled to take delivery of 10 A321, but has decided to accept only five while the remaining five would be delivered in 2016.

According to him, PAL is scheduled to accept two A321 in March, two more in April, and another one in May.

Immediately after buying back the shares of SMC in PAL last September, the Lucio Tan Group evaluated the fleet renewal program undertaken by the diversified conglomerate headed by former president and chief operating officer Ramon Ang.

Bautista said the deferral of the orders would not entail additional costs such as interests and penalties for PAL.

“We have agreed in principle,” he added.

The Tan Group, through Buona Sorte and Horizon Global Investments, bought back the 49-percent interest of SMC’s San Miguel Equity Investments Inc. last Sept. 15 for a total consideration of $1.3 billion.

It would be recalled that SMC through San Miguel Equity Investments Inc. (SMEII) bought a 49-percent stake in Trustmark Holdings Corp. in April 2012 for a total consideration of $500 million. It embarked on an ambitious massive fleet renewal program involving the acquisition of 100 brand new aircraft with orders of 65 brand new Airbus aircraft worth close to $10 billion.

Trustmark owns and controls 89.78 percent of the issued and outstanding shares of PAL Holdings that owns 98.27 percent of PAL.

Bautista said the airline would launch new routes based on a short-term plan laid down by the Tan Group.

He pointed out that PAL plans to fly to Jinjiang in China and Port Moresby in Papua New Guinea.

He said the airline has no plan to expand its destinations in Europe and the US. It currently flies to London in Europe as well as Las Vegas, San Francisco, Guam, and Hawaii in the US.

PAL is set to fly to New York on March 15, exactly almost a year after the US Federal Aviation Administration (US-FAA) upgraded the country’s aviation safety rating back to Category 1 from Category 2.