PAL sees $400-M savings in fuel, maintenance costs

MANILA, Philippines - National flag carrier Philippine Airlines (PAL) sees as much as $400- million savings from fuel and maintenance costs per year as part of its massive re-fleeting program.

PAL president and chief operating officer Ramon S. Ang said in an interview with reporters that the airline expects to slash the share of fuel and maintenance costs to total revenues down to about 40 percent from the current level ranging between 55 percent and 60 percent.

“Fuel and maintenance costs account for about 55 percent of sales revenues or even 60 percent. With the arrival of new aircraft we can reduce that to about 40 percent of sales revenues,” he said.

Ang, who is also president and chief operating officer of SMC, pointed out that PAL could save at least $400 million or about 20 percent of the average revenues of about $2 billion.

Since SMC acquired a 49 percent stake in PAL’s parent firm PAL Holdings Inc. worth $500 million in April last year, the national flag carrier embarked on an aggressive re-fleeting program aimed at acquiring 100 new aircraft.

PAL has an existing fleet of 45 aircraft composed of 19 Airbus A320-200, eight A330-300, four A319-100, four A340-300, five Boeing B777-300ER, and five Boeing 747-400.

The airline entered into a $7 billion contract with EADS Group in August last year for the acquisition of 54 Airbus aircraft consisting of 34 A321ceo, 10 A321neo, and 10 A330-300s and another $2.5 billion to exercise an option to acquire 10 more A330 aircraft last September.

Ang said the airline expects the delivery of eight A330 and eight A321 this year and another 18 aircraft next year, bringing to 72 the number of aircraft acquired over a three-year period.

“With the arrival of the new aircraft you will see a major turnaround for PAL,” the PAL chief said.

Ang earlier said he is confident that PAL would finally return to profitability in 2014 after cutting its losses by half this year with its ongoing re-fleeting program as well as the impending lifting of the ban imposed on local airlines by the European Union and the US-Federal Aviation Authority (US-FAA).

The airline’s parent firm PAL Holdings Inc. trimmed its losses by 24 percent to P2.74 billion in the first nine months of its fiscal year from P3.59 billion as total revenues climbed by 2.4 percent to P55.68 billion from P54.38 billion on the back of higher revenues from its passenger and cargo businesses.