PAL gets $329-M loan for fleet expansion

MANILA, Philippines - China Banking Corp. has arranged a $329-million financing for the addition of seven Airbus A321-200 to the fleet of flag carrier Philippine Airlines (PAL), which is currently in the thick of a comprehensive fleet renewal program.

The aircraft purchase was financed through an innovative operating lease scheme that illustrates PAL’s ability to diversify its funding sources and effectively manage its capital requirements.

China Bank president and chief executive officer Peter S. Dee said the SM Group-affiliated bank supports the fleet renewal program and the modernization platform of the countrys aviation sector.

China Bank is a key player in aircraft financing. It also acted as sole arranger for the acquisition of four new airplanes of another airline company early this year.

The first of these state-of-the-art jets, said to be one of the most modern and safest airplanes to soar the Philippine skies, arrived in Manila from Hamburg, Germany on Aug. 7.

China Bank officials said the arrival of its first A321 is an important PAL milestone, officially putting in motion the carrier’s fleet renewal that covers a firm order of 65 planes from Airbus, the largest aircraft purchase in Philippine history.

The A321 joins the Airbus fleet at PAL that already includes 22 A320 aircraft flying on domestic and regional routes, including eight in service with affiliate carrier PAL Express.

The Lucio Tan-led carrier also operates eight wide-body A330s on higher capacity routes across Asia and six A340-300s on its trans-Pacific flights.

PAL will operate the twin-engine A321s primarily on select domestic, regional and international routes, confident that this aircraft type offers a competitive advantage owing to its seat capacity, cost efficiency and modern look.

Recently, China Bank reported that its gross loans rose to P189.8 billion as commercial and consumer loans steadily marched forward in the first semester of 2013.

Its net earnings in the same period rose to P2.96 billion, up 46 percent from P2.03 billion in 2012.

Non-performing loans (NPLs) fell to just six percent and its NPL ratio settled at 2.64 percent.