Philippine Airlines Plans Major Fleet Changes

Philippine Airlines Plans Major Fleet Changes

The Covid 19 pandemic adversely affected the Philippines Airlines, just as it did with hundreds of airlines worldwide. But the good news is that the Philippines Airlines continued operating, managing the situation admirably. As part of the aggressive restructuring program, the airline recently released some details on how it plans to manage its fleets. Analysts say the restructuring program will certainly lead to a smaller airline. The company plans to remove at least 22 aircraft from its fleet. The airline is also likely to slash more widebodies from its fleet. This basically means the airlines will drop 25% of the fleet.

In a recent news conference, the president of the Philippines airline, Mr. Gilbert Santa Maria, confirmed that the company would venture into a major restructuring path. The president said the company would soon release other details of the planned action. He confirmed that the fleet reduction program was on course. Analysts note that the company's latest move was widely expected after it acted to file a bankruptcy protection notice. The details of the bankruptcy move were, however, not clarified. The executive, however, made it clear the airlines would act to reduce its fleet by taking off 22 aircraft. This means the Philippines Airlines would run 70 aircraft, down from 92. The figure also includes aircraft with PAL Express, a subsidiary of the Philippines Airlines.

All the aircraft that would go off the list are leased planes that would merely return to the lessors. The media could not clearly say which types of planes would be retired. Experts, however, speculate the aircraft to be chucked off the list include the A350 and the widebody 777. At the moment, the airline runs ten 777- 300ER s; 6 of these aircraft are leased. The airline also operates 4 A350-900 aircraft; all these are leased. It was reported that- by May 2021- the airline was already discussing with several companies the procedures of returning at least two A350s and four 777s. The airline was also expected to cancel several upcoming orders for the Airbus.

The company runs 13 A321neos ordered from the Airbus Company. The Philippines Airlines was reported to have ordered 24 Airbuses. The deliveries- that followed negotiations with the Philippines Airlines- were generally expected to delay. Sources said the Philippines Airlines was granted the option to cancel some of the orders in case the delay extended to 2026. It's, however, difficult to ascertain precisely how many orders will be canceled. The airline's chief financial officer, Nilo Thaddeus Rodriguez, explained further: "We got the Airbus Company's support to postpone these deliveries- this also gives us the option to cancel some of the orders that delay past the year 2026 up to 2030. Everything really depends on how our restructuring plans shape up."

The Philippines airlines first filed for bankruptcy recently in the US. Generally, pundits say such a move will translate to the reduction of some $2 billion in the company's balance sheet. Plans to reduce the fleet followed soon after. The airline's major shareholder pledged to inject some $505 million into the company's long-term financing scheme. The shareholder and the investors would pump in a further $150 million to cater to new debt. While announcing the major cuts, Mr. Santa Maria expressed his belief that the airline will successfully complete the Chapter 11 restructuring program by the end of 2021. However, the company official does not expect the airline's revenues to return to the pre-pandemic state until after 2025.

The airline's managers hope that the slimmer fleet will help the company cope better with the significantly reduced demand for air travel. Mr. Santa Maria does not expect the airline to venture into major operational changes beyond fleet reduction. He further explained thus: "We're basically a traditional carrier. We want to reinforce our core business, improve our marketing strategy, improve our brand, and generally recover that way."

Interestingly, the Philippines Airlines plans to buy the new A350 XWB Airbus. The plan is the world's latest new-generation airliner. It's also the newest member of the wider Airbus widebody family. The plane features some modern aerodynamic designs, fuel-efficient Trent XWB engines, and carbon fibre wings and fuselage. The aircraft comes with several other advantages. This includes a 25% fuel burn and emissions reduction. It also comes with a significantly lower cost of maintenance.