Philippine Airlines Defers Deliveries of Airbus Jets

Philippine Airlines has announced that it will be deferring delivery of the remaining Airbus aircraft that it currently has on order. A total of 38 aircraft were scheduled to be delivered by 2020. But the deliveries have now been postponed until 2024.

Copyright Photo: Angelo Agcamaran/PPSG

In 2012, Philippine Airlines placed a $7-billion order for Airbus aircraft under the leadership of Ramon Ang and San Miguel Corporation. Two separate purchase agreements were signed representing orders for 44 Airbus A321 aircraft and 20 Airbus A330 aircraft. Last March, the order was amended reducing the number of A330 aircraft to fifteen, while the A321 order was increased by eight options. But Philippine Airlines did not exercise its purchase option on the eight aircraft, with the option on the remaining four set to expire in 2017.

Since Lucio Tan resumed control of Philippine Airlines, PAL President Jaime Bautista criticized the previous administration for purchasing too many aircraft without destinations to serve. Under the leadership of Bautista, the airline began contemplating deferring the aircraft deliveries last October. "We really have to check if the market we're servicing now requires all these planes," said Bautista. "There were too many orders from Mr. Ang's management."

Philippine Airlines is currently scheduled to accept delivery of an additional 38 planes comprised of A321 and A330 aircraft. "As of this month, we only have 38 remaining Airbus orders now out of the orders made in 2012," said Bautista. "We are working with Airbus on the deferment of our 38 Airbus planes to 2024, which was originally scheduled for 2020."

Bautista added that Philippine Airlines was supposed to accept delivery of ten aircraft this year. But with the deferments, that figure will be reduced. "We should take delivery of ten this year, but only five will be delivered as we asked them to delay the other five until sometime in 2020. Now, Airbus is allowing delivery of five A321 this year, instead of 10, as we asked them to defer it."

Of the five Airbus A321 that are scheduled for delivery in 2015, two are expected to arrive in March, while a further two will arrive in April, and the fifth aircraft in June. Philippine Airlines currently operates a fleet of six Boeing 777 aircraft, six A340 aircraft, fourteen A330 aircraft, fourteen A321 aircraft, and ten A320 aircraft. These do not include the PAL Express fleet. 

According to Bautista, Airbus has "agreed in principle" to the deferral but no formal agreement has been signed as of yet confirming the new delivery schedule. Bautista also confirmed that Philippine Airlines will not be adding any additional routes to Europe in the near future. "Competition is stiff there," said Bautista. However, he revealed interest in flying to Papua New Guinea soon in order to meet the demands of the growing Filipino population residing there. 

Meanwhile, Philippine Airlines continues its search for a strategic investor. But Bautista was quick to point out that an investor will not be found soon, citing the need for the airline to finalize and present a very good business plan first prior to seeking an investment. He added that the deferral of the Airbus order is part of that plan.