Philippine Airlines boosts profit

[Pieter C. 5]

Thursday September 7, 2006

Philippine Airlines told stockholders last week that the carrier will continue to push into new markets and modernize its fleet, with evaluations underway for acquisition of five regional widebody aircraft and three long-haul aircraft in addition to the order for 20 A320 family aircraft that will begin delivery this month. Chairman Lucio Tan and President Jaime Bautista also said PAL will revamp its inflight product, combining its first and business classes into an upgraded business class featuring lie-flat seats and on-demand IFE. Targets for international expansion include China, where its Beijing service will increase to daily from four-times-weekly, and India.

 

PAL posted a profit of $28.7 million in the fiscal year ended March 31, a 63% increase over the $17.6 million earned in the previous year and its best year since 1993. It reported its financial results in US dollars for the first time. Revenues rose 15% to $1.24 billion as "virtually all key performance indices...improved from year-ago levels." Expenses climbed 14% to $1.22 billion as the carrier confronted rising fuel prices by "zealously cutting costs and improving systems," including increased e-ticketing.

 

Are these new orders for A330 and A340 ??

 

 

[kandiah k 0]

Looks like the once unprofitable airline has beaten MAS to proof that even they can survive with good management.

 

 

[Chan CS 0]

Haiz... MAS is in greater danger now...

[Pieter C. 5]

Looks like the once unprofitable airline

 

September 26, 2006

Philippine Airlines hopes to secure this year a mix of foreign bank loans and guaranteed financing to fund its planned USD$800 million fleet renewal.

 

The airline, controlled by Filipino businessman Lucio Tan, may later use Tan's listed holding company, Baguio Gold Holdings, to raise some equity as well, PAL Chief Executive Jaime Bautista said on Tuesday.

 

"Baguio Gold is a vehicle which PAL can tap or can use in the future," said Bautista, a certified public accountant who started his career in the airline as comptroller in 1993.

 

Bautista, who has worked for Tan companies for 27 years, is also president of Baguio Gold, while Tan himself, a septuagenarian who flies around Manila in his personal helicopter, is chairman of PAL and of Baguio Gold.

 

"If Philippine Airlines would need additional funds, for example we need to finance additional airplanes and the creditors will ask us to get more equity, we can run to the holding companies that own us and those holding companies can go to Baguio Gold to ask for additional investments," Bautista said.

 

Under a plan announced in August, Baguio Gold is acquiring a set of six companies, also controlled by Tan, which between them hold 82 percent of PAL.

 

In a deal set to be completed by the year-end, Baguio Gold will pay PHP136 million pesos (USD$2.7 million) in cash for the companies, and acquire debts of PHP8 million - PHP9 billion (USD$160 million - USD$180 million), which could later be converted into equity.

 

Baguio Gold will then be renamed PAL Holdings after it raises its authorized capital to PHP20 billion (USD$398 million) from PHP400 million now.

 

PAL, the Philippine flag carrier which shut down briefly in 1998 due to labor disputes before entering into a 10 year rehabilitation program, is to acquire three Airbus A319s under operating leases this year and another one in 2007. It will acquire five Airbus A320s starting next year and into 2008.

 

"We are working on the financing of these. It can be direct purchase or it can be an operating lease also," Bautista said regarding the A320s.

 

"The downpayment will be funded by internally generated cash. For the balance we are looking at either commercial financing or export credit agency guaranteed financing."

 

PAL previously said it was planning to get guarantees from export credit agencies which would allow the airline to get more favorable interest rates from banks.

 

Since PAL has placed firm orders for narrow-body aircraft with Airbus, the airline could negotiate for guarantees from Britain's Export Credit Guarantee Department, German credit insurer Hermes and France's Coface, the company said earlier.

 

By the end of 2008, PAL plans to have a fleet of 36 aircraft, up from 32 at end-March 2006 after retiring some of its older planes.

 

PAL, which serves 32 international destinations, also has an option with Airbus to add five aircraft to its wide-body fleet between 2009 and 2012.

 

PAL has been back in profits for the past two years but this year expects earnings to fall because of high fuel prices.

 

Bautista said PAL continues to hold nearly 50 percent of the domestic air traffic market, despite aggressive marketing by its rivals, led by Cebu Pacific.

 

(Reuters)

 

[Andrew Ong 1]

MAS is in greater danger now...

 

I agree with Chan CS. Now MAS has stiff competition. First is AirAsia, Fly Asian Express (division of AirAsia), Then Phillipine Airlines. I don't think MAS won't be too happy now.

Edited September 27, 2006 by Andrew Ong

[S V Choong 4]

The airline, controlled by Filipino businessman Lucio Tan, may later use Tan's listed holding company, Baguio Gold Holdings, to raise some equity as well, PAL Chief Executive Jaime Bautista said on Tuesday.

 

"Baguio Gold is a vehicle which PAL can tap or can use in the future," said Bautista, a certified public accountant who started his career in the airline as comptroller in 1993.

 

Bautista, who has worked for Tan companies for 27 years, is also president of Baguio Gold, while Tan himself, a septuagenarian who flies around Manila in his personal helicopter, is chairman of PAL and of Baguio Gold.

 

Never knew that this airline was controlled by a Philippine Chinese.

 

I don't think PAL could even challenge MAS due to the geographic location and security. It has not been the case even when Philippine airlines was profitable during the 80s. It actually takes a lot more than just a profitable airline for people to fly into the Philllpines.

 

 

 

[Isaac 0]

Never knew that this airline was controlled by a Philippine Chinese.

Yes. It has always been controlled by a Philippine Chinese. Even before when the airline ceased to fly for a certain period of time in the 90s.

 

 

[Pieter C. 5]

Are these new orders for A330 and A340 ??

 

Here's the answer:

 

October 20, 2006

Philippine Airlines (PAL) said on Friday it wanted to add eight wide-bodied planes to its fleet and would decide by the end of the year whether to buy them from Boeing or Airbus, for delivery from 2008.

 

The Philippine flag carrier will use the new aircraft to expand its routes to the United States and Canada and to return to Europe after an absence of about a decade.

 

"We are still evaluating whether Airbus or Boeing," PAL President Jaime Bautista told reporters. "We are still negotiating."

 

He said PAL, Asia's first commercial airline, was considering buying or leasing either Airbus A340-600 or Boeing 777-300ER planes.

"We can get the support of the export credit agencies or US Eximbank or we can do... an operating lease," Bautista said when asked how the company would fund the aircraft acquisition.

 

"We will borrow from banks," PAL Chairman Lucio Tan told reporters separately.

 

The expansion is on top of the 20 narrow-bodied Airbus planes that PAL is set to acquire, starting this year, for more than USD$840 million. On Friday PAL unveiled the first of the 20 planes, an A319, which it plans to use for domestic and regional flights.

 

PAL officials said the list price of each wide-bodied plane was around USD$250 million.

 

The airline now has nine wide-bodied planes -- five Boeing 747-400s and four Airbus A340-300s -- flying to San Francisco, Los Angeles and Las Vegas in the United States and Vancouver, Canada.

 

PAL flies to 19 domestic and 24 international destinations. It wants to expand its foreign routes to include Seattle and San Diego initially.

The airline had a fleet of 32 aircraft at the end of March.

 

PAL, which shut briefly in 1998 due to labor disputes before entering into a 10 year rehabilitation program, is aggressively expanding despite a projection of a global industry loss of USD$1.7 billion this year, volatile fuel costs and only a modest expected rise in global passenger traffic of 4.8 percent.

 

(Reuters)

 

I know of a large Pinoy community in SAN, but why SEA ?

 

 

[Sandeep G 1]

I agree with Chan CS. Now MAS has stiff competition. First is AirAsia, Fly Asian Express (division of AirAsia), Then Phillipine Airlines. I don't think MAS won't be too happy now.

 

FAX is no competition for MAS..

 

PAL, well, they are doing good for themselves finally, but MAS isn't performing TOO badly at the moment..

[BC Tam 2]

..... but MAS isn't performing TOO badly at the moment..

Yes, they are losing less money now than what they were losing last year, apparently !

It's quite true then, everything is relative

[Andrew Ong 1]

FAX is no competition for MAS..

 

I think FAX is a competition for MAS because since FAX is a division of AirAsia, MAS's largest rival, then MAS is going to compete twice as hard; What I mean is that MAS has a lot of catching up to do in the Malaysian aviation market.

 

[Sandeep G 1]

FAX was established by AirAsia as part of the domestic rationalisation plan that succeeded months of planning and investigation by the Ministry of Transport, AirAsia and MAS...

 

MAS decided that it wanted to give up on the rural routes as they said they were a drain on profits... which was interesting given that they received a healthy subsidy from the govt. for ALL domestic services.

 

The government gave in and allowed AirAsia to take the bulk of domestic services (including the rural air services) and the latter were to be operated by a new entity called FAX.. who still receive subsidy for the rural ops by the federal government.

 

FAX has plans for expansion but are being hampered by the usual politics and bureaucracy.

 

MAS still has a major foothold in this nations aviation industry. Their biggest problem was yield, and they are somewhat successfully addressing that issue.

 

AirAsia is the "wind' beneath MAS' wings as without AirAsia, we would only be left to wonder what the state of MAS would be today... i.e. it has prompted MAS to adjust itself and return to profitable business.

 

FAX is a small airline with potential.. but it is basically an air-taxi for now, being pinned down by the meddling government.

[Sing Yew 1]

MAS still has a major foothold in this nations aviation industry. Their biggest problem was yield, and they are somewhat successfully addressing that issue.

 

 

They're doing that with a fair bit of cost cutting measures too. Removing menus and downsizing meal portions etc.

 

 

[Daniel Ng 0]

They're doing that with a fair bit of cost cutting measures too. Removing menus and downsizing meal portions etc.

 

Downsizing meal portions? I'm not sure about that. Flown KUL-EZE last month and I had a great experience, in particular the food. We were fed like 5 times on each leg. Great food, generous serving, lots to drink....

[Pieter C. 5]

Philippine Air's Profit Up Six-Fold

 

June 28, 2007

Philippine Airlines (PAL) made a record net profit of USD$140.3 million in the last year, the airline said on Thursday, marking a more than six-fold rise from a year earlier and helped in part by non-recurring items.

 

PAL revised down its comparable net income for the previous year ended March 2006 to USD$22.8 million.

 

The airline has had three straight years of profits after an erratic financial performance since 1999 when restructuring began and despite an environment of rising fuel costs.

 

"These solid results, not just from last fiscal year but over the past eight years under restructuring, confirm that PAL is fully recovered and is now firmly on track towards long-term profitability," company president Jaime Bautista said in a statement.

 

Airline revenues climbed 12.8 percent to USD$1.39 billion in the fiscal year ending March. The growth was supported by average passenger loads of 76.8 percent of capacity, a 15-year high.

 

The airline is currently upgrading its fleet, with plans to acquire up to 20 Airbus A320 jets by 2008-2009 for its regional and domestic services.

 

It has also signed a deal to acquire six Boeing 777-300ER aircraft for its long-haul operations by 2009.

 

(Reuters)

 

[Kenneth T 0]

This region is going to face stiff competition.....MAS should find ways to reposition again for example product differentiation....apart from cut cost mesures

[Isaac 0]

Philippine Air's Profit Up Six-Fold

Considering in what kind of environment PR is operating in but still manage to be profitable, i must say

 

US market is huge for PR. In the 70s-90s, many Malaysians used PR to the US. In fact, my dad, a government sponsored student, flew PR on his first ever trip to LAX (BKI-KUL-MNL-HNL-LAX). I think PR should launch more flights to Middle-east soon.

 

[S V Choong 4]

BKI-KUL-MNL-HNL-LAX

 

They did not have direct BKI-MNL back then? I think MAS do fly out of BKI to MNL on the 732 back then as I have taken it before.

[Isaac 0]

They did not have direct BKI-MNL back then? I think MAS do fly out of BKI to MNL on the 732 back then as I have taken it before.

Yeah. I believe PR still fly into BKI until the mid-90s or 97/98 period. PR probably wasn't operating on the day my dad flew to MNL. It was a loooong way to go to the US. Was also the cheapest way to go to US at the time. He came back 2 years later taking NWA flights (ORD-DTW-SEA-HKG-BKI). He was put on CX on the HKG-BKI sector.

Edited June 30, 2007 by Isaac

[Seth K 3]

I dunno how PR compete with MH directly, they don't even fly to KL. Thou with the codesharing, MH's price for this route is no near cheap, it's cheaper to HKG than to MNL. PR is one of the cheapest to WC out of Asia. The fleet renewal is a step to success like BR, stealing some market from TPE. Before, EVA view as a crappy cheap flight out of USA along with PR, soon to change. The airport is a mess, I dun think it will give any pleasure to transit pax, finger cross on the new T3 opening. Hope they can add more frequency/seats to major cities in Asia. Will be flying to MNL again, hope to see the new T3 or at least improvement

[KK Lee 5]

I dunno how PR compete with MH directly, they don't even fly to KL. Thou with the codesharing, MH's price for this route is no near cheap, it's cheaper to HKG than to MNL. PR is one of the cheapest to WC out of Asia. The fleet renewal is a step to success like BR, stealing some market from TPE. Before, EVA view as a crappy cheap flight out of USA along with PR, soon to change. The airport is a mess, I dun think it will give any pleasure to transit pax, finger cross on the new T3 opening. Hope they can add more frequency/seats to major cities in Asia. Will be flying to MNL again, hope to see the new T3 or at least improvement

 

MNL T3 won’t be open anytime soon, most likely until the next president is sworn in.

 

PR may not be the direct competitor to MH. But MH has lost OFW market shares to Middle East airlines in the last few years.

 

Before Etihad and Emirate started service to MNL, MH was in a good position to capture OFW traffic to Middle East but didn’t bother. Likewise, many Philippinos travel to Europe with SQ and TG instead of MH because of poor scheduling.

 

While competitors are improving, it is frustrating to see MH mindset remain arrogant and ignorant, refuse to change for the better.

 

 

[Ivan L. 0]

I think FAX is a competition for MAS because since FAX is a division of AirAsia, MAS's largest rival, then MAS is going to compete twice as hard; What I mean is that MAS has a lot of catching up to do in the Malaysian aviation market.

 

OT: Air Asia and FAX is NOT MAS' biggest rival. I don't understand how people always say MAS and AK are rival. They are not!!! MAS and AK has different market segments. MAS is premium and AK is budget. However, MAS' strategy to have cheap RM9 airfares is making them AK rivals and it's just plain wrong. MAS shouldn't cut their airfares nor onboard services. MAS must compete with product differentiation, more expensive airfares but great services and amenities. This is why SQ has won and they are always profitable, even though their home base is bombarded with budget airlines. SQ's airfares are not cheap, but customers loyalty is high due to the services and amenities they provide. The current MAS' strategy to compete with AK, instead of airlines like SQ, CX, and QF will lead them to hell, just like airlines in US. If MAS focus on pricing, rather than services, AK will win, as it has lower cost base. Unless MAS is prepare to go beyond expectation, we probably have to see more taxpayers money goes down the drain.

 

Anyway.. does anyone took Phillipine Airlines before? Do they have good onboard services? They seem to have rather cheap business class airfares from Australia.

Edited July 4, 2007 by Ivan L.

[KK Lee 5]

OT: Air Asia and FAX is NOT MAS' biggest rival. I don't understand how people always say MAS and AK are rival. They are not!!! MAS and AK has different market segments. MAS is premium and AK is budget. However, MAS' strategy to have cheap RM9 airfares is making them AK rivals and it's just plain wrong. MAS shouldn't cut their airfares nor onboard services. MAS must compete with product differentiation, more expensive airfares but great services and amenities. This is why SQ has won and they are always profitable, even though their home base is bombarded with budget airlines. SQ's airfares are not cheap, but customers loyalty is high due to the services and amenities they provide. The current MAS' strategy to compete with AK, instead of airlines like SQ, CX, and QF will lead them to hell, just like airlines in US. If MAS focus on pricing, rather than services, AK will win, as it has lower cost base. Unless MAS is prepare to go beyond expectation, we probably have to see more taxpayers money goes down the drain.

 

Anyway.. does anyone took Phillipine Airlines before? Do they have good onboard services? They seem to have rather cheap business class airfares from Australia.

 

Concurred with you.

 

 

[KK Lee 5]

We were fed like 5 times on each leg.

 

Are you sure? Not what we experienced on KUL/JNB, JNB/CPT sector. Total 5 times from KUL/JNB/CPT/EZE is more likely.

 

The continental breakfast or sandwich served on MH is now equivalent to school canteen standard.

 

 

[Seth K 3]

MH onboard dining can also be on request, they always have plenty of left over, the stewardess frequently ask if you want more.

 

MNL T3 won’t be open anytime soon, most likely until the next president is sworn in.

Yeah, that's what I heard. Well saw the terminal, it looks completed, I dun understand why can't they just open it? Like, the politicians loose money or sumthing?

Thanx for the clear up

Edited July 4, 2007 by Seth K