Bautista: The Truth About Philippine Airlines

Ever since it was revealed that Lucio Tan would be regaining control of Philippine Airlines, loyalists of Ramon Ang and San Miguel Corporation have suggested that the nation's flag carrier would be doomed under the management of the Tan Group. Many credit Ang with the successful revitalisation of Philippine Airlines, having recently posted its first profitable quarter in recent years. But as Jaime Bautista resumes his role as President of Philippine Airlines, a much different picture of Ang's "success story" is being painted.

Copyright Photo: Lester Tangco/PPSG
In a recent Philippine Flight Network poll, 55 percent of respondents claimed that Philippine Airlines would perform worse under the management of Tan, while 21 percent stated that it would perform better, and 23 percent stated that it would perform the same. 

Ang advocates have been arguing that the San Miguel Corporation has finally put Philippine Airlines on a path to profitability. However, not all industry observers are convinced with many suggesting that the recent profits gained at the carrier will be short lived as they are a result of major cost cutting measures, which will have a long term negative effect on customer experience and loyalty that will undermine revenue growth in the future. Many believe that the quality of PAL's service and on-board product have diminished.

In a recent interview with Rappler, returning PAL President Jaime Bautista seems to agree that not all the measures taken by the San Miguel management were in the best interests of the carrier and that PAL is not as profitable as Ang claims. Bautista, a Certified Public Accountant, understands better than anyone that there are several ways to present the books to shareholders. But beneath all of the media propaganda and press releases, only one true picture exists and in this case, Bautista claims that it's a mess.

Understanding the True Financial Health of Philippine Airlines

In the second quarter of 2014, Philippine Airlines posted a net income of $33.24 million as passenger revenues increased by 51 percent. Ang revealed the results as a major victory for the carrier. However, Bautista downplayed the results suggesting that a spike in revenue in the second quarter is typical for Philippine carriers as it is peak season.

In spite of the profit posted in the second quarter, Bautista told Rappler that the first and third quarters of this year were either a near break even or a loss. This is in addition to the $500 million that the carrier lost over the last two years since San Miguel assumed management control of the airline.

Although the latest financial statements have not been released to the public, unaudited statements obtained by Rappler revealed that Philippine Airlines earned $11 million in the first eight months of this year. However, what was not revealed by Ang when he announced the profits was that $13.75 million that was declared as "other income" had to be deducted from the earnings in order to cover leasing charges of new aircraft acquired as part of Ang's fleet renewal program. This meant that in spite of posting an operating profit, Philippine Airlines had excess liabilities of more than $2 million over the period.

Under Ang's leadership, Philippine Airlines posted a loss of $264.24 million in 2013, which was more than four times the $61.15 million loss posted in 2012. Overall, in spite of the short term profits gained, Philippine Airlines remains in a volatile financial position given the carrier's excess liabilities due to its ambitious refleeting program and the rapid acquisition of new aircraft. 

A Homeless Fleet That Undermines Profits

When Ramon Ang began ordering new aircraft, he initially suggested that he intended to order up to 100 new aircraft. In the end, he ended up placing an order for approximately 64 aircraft at a $7 billion price tag. However, as time progressed, the order was scaled back and adjusted multiple times as it became clear that Ang had bitten off more than he could chew. 

In the interview with Rappler, Bautista claims that Ang ordered too many aircraft, increasing capacity beyond the needs of the carrier. Increased competition, fluctuating demand, airport infrastructure constraints, and a slowing economy have all led to the inability of PAL to effectively deploy all of its new aircraft. 

Copyright Photo: Michael Arcellana/PPSG
The acquisition of new aircraft is what is currently undermining the airline's profitability as the carrier's long term liabilities reached a staggering $594.29 million as of June 2014. According to Bautista, Ang expanded too rapidly. "Before his entry to PAL, we only have around 40 airplanes," said Bautista. "Now we have 60 airplanes. And then we're taking another delivery of 32 airplanes in the next 3 to 4 years."

Of the current Philippine Airlines fleet, the carrier only owns 33 aircraft, while an additional 52 are under lease. During Ang's tenure, PAL acquired a number of new aircraft including A330, A321, and used A340 aircraft. Ang's goal of ordering new planes was to decrease maintenance and fuel costs in spite of also decreasing the airline's cash flows, which was already suffering after years of multi-billion peso losses. It remains unclear how much the new aircraft are being financed for. However, Philippine Airlines presently is under lease contracts for terms ranging from six to twelve years.

As the airline accepts delivery of new aircraft through to the end of 2014, it remains unclear where they will be deployed. This will inevitably impact income in the third quarter. The carrier is already anticipating a loss but has yet to release the quarterly report. According to Bautista, financing aircraft leasing presently represents the majority of Philippine Airlines' capital expenditures. 

With average leasing rates set at 1 percent, the cost of a $100 million aircraft lease would amount to $1 million. These costs must be shouldered by Philippine Airlines regardless of whether the carrier is using the aircraft or not. As of the end of June 2014, Philippine Airlines had three Boeing 777 aircraft and one Airbus A320 aircraft under a finance lease, while an additional three Boeing 777, ten A330, seven A321, eighteen A320, and one A319 aircraft remained under operating leases.

Copyright Photo: Angelo Agcamaran/PPSG
Bautista indicated that leasing companies continue to charge Philippine Airlines for planes that have yet to be integrated into operations. "If you don't use it, you're wasting millions," said Bautista. "We wanted to use them, but we can't find destinations." The re-fleeting program has amounted to $1.5 billion in liabilities for the airline.

He added that acquiring countless new aircraft was not a path to profits and slammed Ang's refleeting program suggesting that it lacked "deliberation," which is now costing the airline money. In addition, the airline lacks pilots.

When Ramon Ang began making adjustments to its original Airbus order with the reduction of twenty orders for A330 aircraft down to fifteen in March 2014, Ang claimed that it was due to the inability of the carrier to obtain Russian overflight rights to Europe, preventing PAL from deploying its new A330 fleet on flights to Europe. However, others claim that the reduction came as a result of the realization that PAL had ordered too many aircraft and that a massive European expansion was overly ambitious, particularly after the challenges in generating profit on the carrier's route to London.

In order to compensate Airbus for the reduction of A330 aircraft, PAL increased its order of A321 aircraft by eight. Ang had also struck a deal with Rolls Royce to purchase a number of spare engines at a favourable price. However, the reduction of A330 aircraft has now impacted the Rolls Royce deal and the carrier is now faced with attempting to get the deposit returned on what is now excess spare engines. But Rolls Royce is not eager to comply.

The excess aircraft has led to the dramatic reduction of PAL's average fleet utilization for its new aircraft. While most carriers attempt to keep their aircraft flying for 14 to 16 hours per day in order to generate a healthy profit, the new aircraft of Philippine Airlines are only presently being flown on average 4 hours per day. While it could be possible to increase frequency on certain routes or to open new routes, congestion at Ninoy Aquino International Airport prevents Philippine Airlines from fully exploring all of its options. In addition, the Philippines still needs to negotiate new air service agreements with certain countries in order to permit local carriers to open or increase capacity on certain routes.

The Cambodia Airlines Saga

Although Philippine Airlines has not traditionally demonstrated interest in taking a stake in a foreign carrier, Ramon Ang expressed interest in entering such a deal primarily to find a home for the excess aircraft that he had ordered for PAL. Unfortunately, the $10 million deal with the Royal Group of Cambodia fell through. 

Ang believed that the new venture known as Cambodia Airlines would lead to the fastest growing airline in Cambodia, while industry analysts such as the Centre for Aviation declared the project as "risky," suggesting that San Miguel Corporation focus solely on operations in the Philippines. Because San Miguel Corporation entered into contracts for Cambodia Airlines before even closing the deal with the Royal Group of Cambodia, Philippine Airlines must now absorb $5 million in fixed costs that are payable to contractors on behalf of Cambodia Airlines over the next five years. 

The Future of Asia's First Airline

Although the new Bautista led management team has its fair share of challenges ahead, the news is not all bleak. Philippine Airlines' recent long-haul expansion has been a success, which helped the airline to dramatically boost its revenues. The majority of its long-haul routes are profitable with the exception of the London route. 

Bautista questioned the decision to launch flights to London Heathrow in spite of the irrational time slot that had been allocated to the carrier, which was not only inconvenient for passengers but also prevented PAL from maximizing connecting traffic. This put the carrier at a competitive disadvantage. In addition, the Centre for Aviation suggested that European expansion was risky given the "intense competition" from neighbouring Southeast Asian carriers, and that Philippine Airlines lacked international partnerships, airport infrastructure, and the necessary geography to make such a route viable.

It is expected that this next chapter of Philippine Airlines' life will adopt a much more conservative approach when it comes to expansion and growth. Such a strategy has served competitors like Cebu Pacific very well. As an immediate priority, Bautista says that the airline must find a solution to minimise the impact of ordering excess aircraft. At present, Philippine Airlines has enlisted a leasing company to sublease some of the excess aircraft. However, the desperation to sublease is resulting in lower lease prices with Vietnamese carrier, VietJet, already subleasing some of the aircraft.

With another ten Airbus aircraft due to arrive in 2015, plus an additional ten in 2017, and another eight in 2018, Philippine Airlines is desperately trying to defer the deliveries of the aircraft to allow for some breathing space and improved cash flow as it attempts to find homes for the aircraft. 

Image Source: Wikimedia
But the issues are not just internal and Philippine Airlines is seeking the cooperation of the national government to expedite the construction of a new airport in order to accommodate more aircraft and passengers in Manila. "We are not able to maximize utilization of airplanes because of the limited infrastructure facilities," said Bautista. It is believed that a new international gateway for Manila would cost nearly $10 billion.

Bautista does not believe that it was wrong to order new aircraft, but rather that the volume of aircraft ordered needed to match the rate of annual market growth. "It's just about timing. The market grows an average of 6% to 7% each year," said Bautista. "But the increase in our capacity is almost double in the last two years. So that's the challenge." Mounting new flights is not as easy either as competition increases from low-cost rivals that are rapidly eating into market share. Philippine Airlines recently scaled back its domestic operations from Cebu due to increasing losses stemming from low-cost carriers such as Cebu Pacific and AirAsia. 

Expansion Plans Around the Globe

Although Ramon Ang unveiled an ambitious expansion plan that saw Philippine Airlines entering a number of cities across Europe and North America, Bautista says that the new management is not keen on expanding further in Europe. This should not come as a surprise given the widespread warnings that were issued to Philippine Airlines by industry analysts that highlighted the risks of entering Europe. Most believe that serving the continent via code-share agreements with partner airlines is a more prudent option for PAL. 

However, Bautista does want to build the carrier's presence in the Middle East and the United States where there are large established populations of overseas Filipino workers. But before the airline can concentrate on expansion, Bautista says that the priority is to improve the airline's cash flows. This might mean soliciting a strategic investment from a foreign carrier. 

"I personally think there's a need for PAL to look for a strategic partner. We will recommend to the owners that we should go toward that direction of getting a strategic partner," said Bautista. "A strategic partner could be a carrier anywhere in the world as long as it should have airline operations."

Moving forward, Bautista believes that the year should end well if the carrier is not burdened by overcapacity and excess aircraft. Analysts will be tougher to convince suggesting that Philippine Airlines is still a risky investment. However, recent partnerships with Abu Dhabi-based Etihad and Tokyo-based All Nippon Airways may create future opportunities as ties strengthen. 

Image Source: NewsFlash.org
Meanwhile, Bautista will continue to clean up after the departure of Ang, who apparently did not fully disclose all of his transactions at the carrier. As an example, Bautista noted that Ang terminated an existing call center contract in favour of signing a new contract with a San Miguel Corporation subsidiary, which was supposed to be cheaper, but turned out to be more expensive.

As for Lucio Tan, he is happy to have his crown jewel returned to the family. "Mr. Tan thinks Philippine Airlines is a very important asset of the country," said Bautista. "It will take a guy like Lucio Tan, who is willing to risk a big amount of his fortune to make it work."
Without a doubt, the Philippine Airlines saga will continue...


83 comments:

  1. Maybe, this is the right time that airphil express should comeback! Resume its flight from their Cebu hub, and make another new hubs like Davao and iloilo.i also want to suggest that pal should add additional flights from Manila to General Santos City! Cebu pacific had 4 flights a day from mnl to gsc while pal has only 1 flight a day. Can you see the big differerence?

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    1. Good Idea. PAL Express could operate from Manila and Cebu and upgrade with business class seats and be the only domestic airlines to do so and Airphil could cover the Davao, Zamboanga, Iloilo, and GenSan Hubs with its old fleet before rebranding

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    2. All PR flights with 2 beside it like for example PR2865 are all PAL express. Crew wearing same uniform though so you get confused. PAL soon will have no more domestic flights it will all be serviced by PAL EXPRESS. We don't know it but we are paying PAL fare for a PAL EXPRESS service specially Cebu flights.
      PAL EXPRESS was never gone it's just anonymous.

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  2. Strongly Agree with that. Bring back Airphil Express!!! Those excess plane should be taken over by airphil Express both domestic and international. Make some promo fares like piso fare, P88 fare, P188 fare. Airphil Express can make the full use of those new aircraft.

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    1. then PAL concentrates on domestic and international routes with premium markets who are willing to pay premium.

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    2. as for the international flights promo fares, if the passenger Visa is denied by the destination country..then, offer refund at least 14 days before (but with processing and service fees...). perhaps, that can encourage more passengers to book in advance.

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    3. Good luck getting a refund from PAL. Cancelled my LHR-MNL flights due to the A340 switch and after waiting for 2 months I got my credit card company on the case, who was able to recover the money. PAL is an embarrassment to the Philippines and should just focus on routes where it doesn't face competition from properly managed airlines.

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  3. for the excess A330. IFE can be installed there....then deploy it to US mainland (with stops in Hawaii). then use the B777 to New York. it might attract more passengers because those planes are brand new.

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  4. PAL can start selling those old planes to ensure that every planes will be brand new and will be put into good use. Then some planes will be on storage just in case if one plane is on maintenance. the other plane will take over. in that case, PAL will always be on time. Business people who are in a hurry should take PAL because PAL will be on time!!!

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    1. or another option is: PAL can trade those excess planes for more B777 (equipped with IFE) with other airlines. If one B777 is under maintenance, PAL can use the other B777 on its US routes. As for the old A340. PAL can sell those its because it is old already and consumes more fuel.

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    2. Some simple math proves that the A340 are a bad idea. If Singapore Airlines cant make money filling them with 100 passengers paying $5000-10,000 each (earning $500k-$1M) how can PAL do so with 300 passengers paying $1000 a piece (earning $300k at best). No one wants the A340s because of the high operating costs. They were foolish for taking them on, while everyone else is getting rid of them!

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    3. How easily can they get 777s? I thought those were high in demand.

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  5. make some sense, why dont the PAL put some promo fares like the cebu pac, for a little period of time, for them to earn even little, but they can gain the attention of the people in that way, the chances of having a Full Pax Flight everytime is a big Chance. RIGHT? -rhys

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  6. PAL could probably recall its experienced executives that were prematurely retired and replaced by RSA with order takers that acted like managers and get consultants on strategy setting - those who know the market that PAL serves and are respected by their peers in the industry.

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    1. That's a silly move. Better to give the younger guys in the organization a chance rather than bring back the old guys.

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  7. Why make all the excuses for failure already?? Seems like the LT group does not have the confidence to run PAL?! The SMC group didn't whine about what it had to work with when it took over and yet accomplished so much in so little time. All eyes on you now PAL

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    1. People have noticed that Lucio Tan has no real good plan for PAL except to bring it down. That is why Lucio Tan has to resort to accounting technicalities to make it appear that PAL will be in the red. But people know the real reason why it will happen to PAL is because of Lucio Tan's looming mismanagement of PAL again.

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    2. Why spend billions in investments only to bring it down? I applaud your ridiculous logic sir.

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  8. The problem is they can not easily increase capacity for international flights because of the seat availability that is being agreed by both countries.

    My 2 cents opinion is to expand its hubs like CEB, DVO, KLO and ILO to offset the congestion in MNL. 5J has been successful in doing this and with 2P to support this hubs, will give them utilise this excess plans and deploy the A321 as PR to profitable domestic routes like CEB, ILO, DVO in conjunction with the 2P operated A320.

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    1. What are you talking about? Both countries? USA and RP? For your info, it is still a free market economy for USA, therefore, if PAL can fly more passengers to USA, it is OK for USA. On the other hand, USA's airlines like United, Delta and American are free to fly to RP and rake all Pinoy passengers who want to fly them. Don't you know about this yet? What is needed is the departure/arrival scheduling in the cities that all these airlines are flying. For instance, if PAL wants to arrive at Los Angeles at 5:00 PM local, it has to have a gate slot allotted to PAL at that exact time and vice versa. I remember the time (before 2008 recession) when Cathay and Korean Air increased their flight frequencies from one a day to twice a day to LAX because the market was booming. That means they are making money! PAL can do that as well. In short, there is no limitations in a free market economy. Just follow government and other local protocols to do so.

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  9. PAL should expand and invest to other countries like AirAsia from Malaysia and TigerAir from Singapore.

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    1. PAL previously have been on this path with the Cambodia Airlines and hasn't been fruitful. They should be focusing more on beefing up their domestic market, open new hubs and use PALEx or AirPhilEx (whatever they will call it later) to go head on with CEB while PAL will continue to expand on their most profitable routes (internationally or domestically).
      Recently, SIA has increased its stakes on the budget carrier Tiger after the later pulled out in most international operations it had. Even AirAsia expansion outside M'sia is not even doing good.
      Code-sharing agreements with other airlines will help them expand their network with less risk for the moment and they should consider consolidating all their acts properly in order to survive.

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    2. I agree. Also PAL should be more aggressive when competing to a more established and popular CEB in the domestic market.

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    3. The problem is domestic and regional flights are not as profitable as long haul flights. IMHO PAL should concentrate on long haul flights. Domestic and regional is a lost cause due to rampant competition. PAL has an edge as they are the only airline with a direct flight to the Philippines.

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  10. PALpak talaga ang PAL.

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  11. It looks like most of you guys blogging have not had experienced any long-haul flights (to USA, for example) whether on business or pleasure as I can see that most of your suggestions are very shallow. If PAL really utilizes its 777s to New York City, the first thing that it does should be to match those 777s operated by Singapore Airlines and Cathay Pacific who are flying the same route. First: Seat configuration - if those airlines use 2-5-2 seating for economy, then PAL should not use 3-4-3 as travelers are very particular with seating arrangements especially on long-haul flights. Second: Compete neck and neck with those carriers mentioned because their services are far better than PAL's (as of now). Third, plan for better marketing strategies, i.e., inflight extras, real discounts for frequent fliers, etc. For Filipino fliers who are not green card holders or citizens of USA, it poses a huge problem securing visit or tourist visas to USA as only those who have considerable assets and influence are able to obtain such visas. In that scenario it would be more advantageous to the ordinary Chinese, Japanese, Koreans, Singaporeans and Australians to fly to USA, for example, who are flown by the competition, as they can easily secure their visas easier than the Pinoys. It is reality, what else can we say and do?. Good luck PAL!

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  12. Of course the purchase of all those planes had only one goal: pocketing the hefty commissions..
    Wishing the"old PAL " team much succes!!!!!!!!!!

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    1. Well said, thank you!!!
      Now, Lucio should initiate an aggressive audit in order to identify the culprit/s.

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    2. If there is anything to audit, it has to be the side businesses of Lucio Tan which are making a killing at the expense of PAL. While these side businesses are raking in the profits Lucio Tan is declaring that PAL is losing money. The other thing to audit should be the government perks and privileges extended to PAL as a flag carrier. Government should review these because the savings out of these perks and privileges just go to the pocket of Lucio Tan who it seems has no real intention to modernize PAL and does not know how.

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  13. I want to know if PAL still wants to build its own airport.....

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    1. No, because in the article, it is stated that they plan to petition the Phil. government to do it for them. The projected cost is ten billion U.S. dollars. Whew.......

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    2. And besides, with the current rules on PPP esp for airports, current airline operators can not bid for these projects. That's why SMC consortium was not considered for the MCIA PPP.

      Maybe now SMC will consider seriously their airport project whether be it in Sangley Point as proposed by JICA or on their proposition if RSA is serious about it.

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    3. And why would the government solve Lucio Tan's problem of poor marketing or failure to sell his tickets or seats resulting to too many planes. I don't think the government is willing to take the blame for the lack of talent of Lucio Tan to sell his product. The problem of PAL is not the airport but Lucio Tan!

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  14. when you let a Philipino "Business Tycoon" in your house you know what to expect. Right?

    Time for a criminal investigation!

    Good luck Sir Ramon!

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  15. Once Cebu Pacific has started its scheduled flights to the USA, it may be the end of PAL's story here in the states. That is why, PAL should start thinking about matching CebuPac's business strategies like low piso piso fares (if it ever exists) and PAL has to swallow its pride to become low-cost airline like Aer Lingus of Ireland which is popular and profitable. Based on various travel (computer) sites and travel agencies here, an economy fare of PAL's USA to Manila is still expensive, compared with competitors' fares from Korean, All Nippon, Eva Air and Cathay Pacific. . There is no way PAL could financially survive if such fare does not go down. Pinoys and FilAms here will definitely shift to Cebu Pacific based on the cheapest air fares (e.g., low-cost airline fares) if PAL does not take note as soon as possible!

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  16. And if PAL becomes a low-cost carrier, it can compete with Asian airlines serving European cities as well. PAL should think about passenger volume based on such low fares, repeat business from fliers, strategy of funneling passengers to Manila (from all Asian cities it currently serves) on their way to Europe. All of these will happen only with low, low fares.

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    1. Every European legacy carriers are struggling and also has many strikes by their pilots or cabin crew. This is the challenge that PAL is facing here. They can not simply implement piso fare across the board because operational wise, PAL is different from CEB. PAL should improve on their efficiencies in operations to have profitability. One thing hounding them is the capacity of NAIA which also affecting their efficiency. They really could do head-on with CEB by revitalizing PALEx and also consolidating their schedules, people has options. Even in regional int'l flights, they could alternate the PR and 2P flights put these 2P flights in wee hours since most of the 2P flight will be used domestically in the day time and post some promotions like Piso fare to lure in capacity and maintaining their presence at the same time.

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    2. PAL is a mismanaged company under Lucio Tan - then and now.

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    3. Bcoz' PAL laging PALPAK sila.

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  17. underutilized planes? Then use them, dammit! And yet JBB decides to cancel some more proposed routes. If profitable routes are really that hard to come by, why does cebpac continue to add routes? And by the way, cebpac planes don't just have good passenger loads, but cargo loads as well. Before PAL eventually pulled the plug on its cebu hub, cebu cargo already noticed a significant drop in that business, yet next door at cebpac, cargo is humming.

    There is business out there. PAL just don't know where and how to look for it. If RSA was new and committed mistakes, JBB is too conservative. Rather than sulk and complain they have too many planes and too few routes, then just add routes! Enough with the baloney they can't just add routes without looking at profitability. You think Lance Gokongwei will operate at a loss?

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    1. I agree. It is a shame that the once market leader PAL has downgraded itself to being a market follower, following Cebu Pacific. Team Lucio Tan has little understanding of the market and of the airline business in spite of years in the business.

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  18. Dont you know that PAL domestic system is Air Philippines? just to let know.. all Air Philippines aircraft wre Painted PAL for your Info tha's why you don't see Air phil aircraft now.

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  19. I hope PAL will tell the Truth so that the customers will know that they are FLYING PAL EXPRESS not PAL IN THE DOMESTIC SYSTEM.why not paint PAL EXPRESS INSTEAD PHILIPPINES ON THE AIRCRAFT SO THAT THE CUSTOMER WILL KNOW WHAT THEY ARE PAYING FOR..

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  20. Some Western European legacy airlines are having some problems with their respective unions/employees but they continue to make money as they have extensive markets worldwide. Examples are: Lufthansa, Air France/KLM, British Air/Iberia. Of course you cannot compare these airlines with PAL at this time in terms of market share and services. But PAL can still try to code-share with Middle Eastern airlines like Etihad, Emirates, Gulf Air, Qatar Air, and others because they all fly to Europe as well. I've flown PAL to Europe in the early 1980's (with its DC-10s) and I was impressed with its passenger load factor because it has code-shared with Alitalia, KLM and Swissair. My flight to Rome was 3/4 filled with Italian passengers from MNL. At this time, PAL could not go solo from Manila direct to Europe again because it needs at least to fly a 777 nonstop with (350 passengers) to break even. It is a difficult proposition because of competition. Likewise, PAL should establish and get a good grip (at all cost, meaning lower fares) of its North American market. Remember, Cebu Pacific is coming to North America sooner of later! It's now "the talk of the town" in the USA.

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  21. I am a frequent PAL flyer based is Seoul. However, PAL's quality has greatly deteriorated and has now gone to the level of a budget airline save for the meal service. The seats are now so tight and there is no more movie or audio service. Some budget airlines (Cebu Pacific) will even be better if it served meals with their flights.

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  22. RSA ordered the airplane "to get a buy-out" from the ICAO Significant Safety Concern and the EU blacklist. Airbus tangled this carrot and used its influence in both organizations to get the international upgrade. That is in my opinion the real background on the Airbus order. The order makes no sense as such because NAIA can not accommodate even 15% of the existing PAL fleet at the terminals in addition to congestion at NAIA. Mr. Bautista's decision is correct. PAL has to find now ways and means to make money with the existing underutilized fleet. The old B747s, A340s and A330s fit the CIAC airport, a bone-yard. Let's give the old/new management a chance to proof their management skills. The 99 cent question is now: who collected the rebates for the Airbus order?

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    1. Ako ng magnakaw sa rebates. I steal your money.

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  23. I think the Airbus order is questionable because the A330-300 cannot fly non-stop to the mainland US or Europe with a full load. Why did PAL order so many A321's, and in such a poor low cost configuration? JB is right, too many planes which do not have the routes to fly

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    1. Because ang BOBO ang PAL. They should rename from "Philippine Airlines" to "PALPAK Airlines"

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    2. Wala lang talaga alam si Lucio Tan about running an airline. Soon after nag takeover si Lucio Tan sa PAL wala man lang announcement kung paano niya mas i-modernize ang PAL. Walang announcement kung paano mas mahihigitan pa ni Lucio ang modernization na ginawa ni RSA sa PAL. Wala, dahil walang idea.

      Ang naririnig kay Lucio Tan sa umpisa pa lang ay traits ng isang big loser dahil humahanap na agad ng sisisihin. Example ay Si RSA kasi ganito, ang gobyerno kasi ganito, ang requirement kasi sa ibang bansa ganito, ang airport kasi ganito. Ang nakikita lang ni Lucio Tan ay threats. Hindi nakikita ni Lucio Tan ang opportunities. Kaya sa isang kagaya ni Lucio Tan, konting panahon lang ang bibilangin at bagsak na uli ang PAL. Si Lucio Tan mismo ang pinakamalaking threat sa PAL. Maayos na nga kay RSA nagmagaling pa itong si Lucio Tan when wala naman palang alam.

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    3. Retire na lang si Mang Lucio. 80 years old na yata siya. Sobrang over aged na niya. Pagpahingahin na lang si Mang Lucio at mukhang pang-1950s pa ang business style nila ni Mang Wash Sycip.

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    4. The A330-200 (when full) is able to fly 6.100 nautical miles non-stop and the distance between Manila and Honolulu is 4,200 nautical miles. Therefore, the aircraft can be utilized by PAL to its North American routes with a technical or aviation gas stop in Hawaii (after flying nonstop for 10 hours).
      Then from HNL to Los Angeles or San Francisco is about 5 hours flight (so it is feasible and OK. Remember that Hawaiian Airlines used to fly B767 from HNL to MNL 3 years or so ago? And the 767 is smaller and even less modern than the A330. For the European route, it (A330-200) has to stop at least once (preferably Middle East). Now, if there are more A330 planes for delivery to PAL, it should fly them to cities like San Diego, Phoenix, Seattle and Las Vegas (again). These cities have considerable Pinoy population plus American locals and expatriates who are eager to vacation to exotic lands at least once a year if the fares are affordable. All of these flights will stop in Hawaii, of course! Remember, if PAL continues to be aggressive, it has a lot of reasons to earn profit. It will also solidify its North American market base as Cebu Pac is coming to USA. Hello Mr. Jaime Bautista, you may study this suggestion!

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    5. No i don't want to study your suggestion becoz' we are doing fine.

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    6. "Retire na lang si Mang Lucio"
      MANG LUCIO? What you say to me?

      "80 years old na yata siya. Sobrang over aged na niya."
      Ikaw ang over aged. Don't say i am overage or i will sue you

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    7. Peepol of da PilipinsNovember 9, 2014 at 8:35 PM

      Imeldific to Crony No. 8: Give to McKoy what belongs to Mckoy.
      Peepol to Imeldific: Give to the people what belongs to the people.

      Delete
    8. Peepol of da Pilipins:

      o'really? ( ͡° ͜ʖ ͡°)

      Delete
    9. Huwag nyo na pilitin mag retire si Mang Lucio. Hihintayin pa niya ang 85 years niya sa PAL dahil meron yata ibibigay na Free Hearing Aid kapag naka 85 years na si Mang Lucio sa PAL.

      Alalayan na lang si Mang Lucio dahil nag-u-ulyanin na yata at 80 years old. Mukha yata nakakalimot na siya ang pumirma at
      nag approve sa mga problematic at dami-daming eroplano ng PAL.

      Delete
    10. Mang Lucio?
      Hahop mo anonymous. Ayoko ako mg retire dahil gusto ko i magnakaw ang pera.

      Why you talk about my face? Your face is probably all wrinkled and dry.

      Delete
  24. After being a PAL Elite or Premier Elite member for the last 15 years, I have decided to fly only domestic (PAL Ex) and long haul with the 77W. None of the new planes are passenger friendly as they are all in low cost carrier configuration. Back to SQ and CX for all travel in the region, Europe, and the Eastern US

    ReplyDelete
    Replies
    1. I cannot blame you. SQ and CX are the world's best (multi-awarded) airlines. I have flown them too in the past and I will not hesitate to fly them again any time!.

      Delete
  25. Why is it when there is a PAL article there's always a lot of comments than the rest of the post here?

    ReplyDelete
  26. Why? Because PAL will continue to do its own type management policies even if you see it hide itself from "red ink" year in and year out. That means there's something wrong with PAL's income statement. And as true Filipinos, we do not want PAL to go bankrupt; that's why, there is this forum to voice opinions and suggestions. As Mr. Bautista says "we are fine, he does not need suggestions", then we will not read and opine anymore about PAL's "issues" good or bad. Good luck Mr. Bautista. Good bye.

    ReplyDelete
    Replies
    1. Certinally i will make PAL the world's worst Airline just as NAIA is the world's worst Airport. Thank you for your Opinion! :)

      Delete
  27. There you have it folks, a promise of another rinky-dink performance from the world's worst airline manager. Not surprising at all if you have Lucio Tan in command. We have seen it before.

    ReplyDelete
  28. there's gossip and rumour going around certain business communities that the whole sale from lt to sm and back again to lt was planned right from the very start to rid of the carriers "legacy" problems ie palea, engineering, etc... lets wait and see what happens next...

    ReplyDelete
  29. the buttom line walang fresh capital infusion si LT he even borrowed money to buyout RSA do you think fleet expansion is foolowed by capital infusion but rsa wanted LT out of the picture to buy hin out my sources informed me that RSA will infuse more money as long as the LT group is bought $10 B is the figure they wanted to add

    ReplyDelete
    Replies
    1. I bought out RSA because i hate Ramon Ang!!

      Delete
    2. Lucio had to buy back PAL at double the original price in just 2 years and to do the buy back Lucio had to pledge his bank PNB as collateral to BDO to get a loan. If Lucio will not work hard Lucio will not have enough income to pay back his BDO loan and other expenses.

      But because Lucio is not working hard his income will fall short. Lucio does not also want to put additional money into PAL because Lucio is a fake Filipino who does not share the Filipino sentiment to see a modern airline. In short, a fake Filipino like Lucio Tan should not carry the Philippine flag.

      Delete
    3. I find the above comment ridiculous. If Tan does not want to see PAL succeed he could have save himself billions and wash his hand of this. He could have sold all his shares to Ang and made money. What the hell is a fake filipino anyway ?

      Delete
  30. months ago....i really wanted to ride PAL to HK... however, since PAL has no bayad center or bank payment option. I was forced to book in Cebu pacific. and I dont use credit card on internet either. I hope PAL can have bayad center or bank or 7-11 options for payment options. If we will pay via travel agencies. I hope PAL will publish the list of their authorized travel agencies ( so many travel agencies out there, i dont know whom to trust). .... With these....I hope PAL can get more passenger to ride and make use of those excess planes.

    ReplyDelete
  31. Pal should advertise that pal in air is free to let ppl know that there is IFE. Dat will pull more ppl to ride pal.

    ReplyDelete
  32. PAL with Lucio Tan as head is a thing of the past. PAL was doing better when Ang was at the helm. Ang knew what he was doing. Yes, maybe he had bitten off more than what he could chew but he had other plans in his mind. I'm having some doubts about the future of Asia's first airline. It'd be much better to merge PAL with Cebu Pacific than to see Ang hold the airline again.

    ReplyDelete
  33. Under Ang the claims of PAL's profitability are just exaggerations to impress the share holders and the media. They came from major cuts in terms of personnel and quality of service. Yes, while under Ang on paper PAL made profit for the first time in years but that is only an illusion, they had to sacrifice a ton for that profit. In 2012-2013 Ang lost a ton more money than several years of mismanagement combined. One good thing that came from Ang's management of PAL is that Ang cleaned house. Now PAL is actually internally healthy enough to be making real profits.

    ReplyDelete
  34. Let us say thank you to RSA for having the will and determination to clean house the house for PAL.

    Because of the works of SMC, PAL is now profitable at last.

    ReplyDelete
  35. Kailangan ba ninyo ng isang utang upang patatagin ang iyong utang? Ikaw ba ay nangangailangan ng isang pautang sa pananalapi o palawakin ang iyong negosyo? o para sa pagbili ng kotse, pagbili ng bahay at iba pang mga personal na pautang atbp bigyan namin long term loan para sa isa sa limampung taon maximum na may 2% interes. Ikaw ay garantisadong 100%. makipag-ugnay sa amin sa pamamagitan ng email address: ptlender01@gmail.com
    Salamat at Inaasahan sa iyong prompt reply.
    bumabati,

    ReplyDelete
  36. Mr. Lucio Tan is a cautious and smart business man who also is involved with MacroAsia, for the aircraft maintenance arm. And because he spends wisely and thriftily for his personals, he may not need to acquire unexplainable funds for his lifestyle.
    I found out more about Mr. Tan when I read a PNB hard bound centennial anniversary commemorative book at a PNB branch. (At the beginning, Mr. Tan applied for a bank loan then with PNB and he treated the evaluating staff with pancit bihon and was not pretentious. Decades later in the 2000s, he even installed retired PNB boss to run PNB in gratitude.

    ReplyDelete
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