PAL earmarks $450M for capex, targets to buy 22 aircraft

 PAL earmarks $450M for capex, targets to buy 22 aircraft
BW FILE PHOTO

FLAG CARRIER Philippine Airlines (PAL) has allocated $450 million, or more than P25 billion, for this year’s capital expenditures (capex) to expand its fleet and meet increasing market demand, its top official announced on Tuesday.

“(PAL’s capex) includes the refurbishment of the A321CEOs, all the aircraft maintenance and upgrades we are doing, (as well as) the purchase of new aircraft,” Anna Isabel V. Bengzon, PAL senior vice-president and chief financial officer, said during a media briefing.

She also said the airline’s 2024 capex exceeds last year’s, which was below $170 million.

The company’s 2024 spending will be covered by internally generated funds and debt.

The airline plans to purchase at least 22 aircraft, which will be delivered between 2025 and 2029, said Carlos Luis L. Fernandez, PAL’s general counsel.

These aircraft include nine A350-1000s and 13 A321 New Engine Options (NEOs) for the company’s nonstop flights to North America, other overseas destinations, and regional routes in Asia and Australia.

The airline is scheduled to operate nonstop Manila-Seattle flights three times a week starting Oct. 2.

Seattle will be PAL’s sixth destination in the US and its eighth in North America, the airline said.

“PAL now operates the largest network of nonstop flights between the Philippines and the United States, serving Los Angeles, San Francisco, New York, Seattle, Honolulu, and Guam,” PAL said in a statement.

“We have been looking into Seattle for a long time already, even before the pandemic. It is always on our radar,” said Stanley K. Ng, president and chief operating officer of PAL.

The airline noted that almost one million US tourists visited the country in 2023, making the US its second-largest source of tourists.

Aside from Seattle, which the company considers a promising market, PAL is also looking to explore more Asian and local destinations. However, some long-haul flights it plans to offer will be on hold for now until the arrival of its aircraft order.

“There’s a possibility also of reviving some of the previous destinations that we used to fly to,” Mr. Ng said.

“One market that the company is looking at is the revival of its Cebu-Osaka flights,” PAL Vice-President for Network Planning Christoph Gaertner said, adding that it also plans to operate flights to Sapporo in Japan.

The company is also hoping to resume its Europe flights, which were discontinued during the pandemic.

“That is always our aspiration to go back to Europe. At the moment (we are) still carefully studying and exploring with European countries to also get some incentives,” Mr. Ng said. 

With the company’s planned expansion and procurement of more aircraft to service the growing travel market, PAL is expecting to grow even further in 2024.

For 2023, PAL Holdings, Inc., the listed operator of PAL, saw its attributable net income more than double to P16.81 billion last year, driven by heightened passenger volume and route expansions.

Its passenger revenue increased by 37% to P160 billion in 2023 from P114 billion in 2022, boosting the company’s overall revenues.

“We do not expect a 30% growth, definitely not. The new base is now 2023; we are expanding our capacity by about 10-12%. We do not expect that kind of growth anymore, just normal growth,” Ms. Bengzon said, describing that normal growth would be in the high single digits.

“Let’s see how it works. Because the capacity is increasing by that much as well. So, it’s in line with the capacity increase,” she said. — Ashley Erika O. Jose