Airlines In The Philippines II

[JNC03]

Will some PAL execs join the state visit to the US tomorrow?

For the Boeing 787 orders, since mainstream media mentioned that some business tycoons will join in the trip tomorrow.

[XWB_flyer]

JNC03 wrote

I think nothing is wrong in picking up A321neos and 789s in the used market as long as it is in good condition.

Cebu Pacific recently picked up A320neos in the used market for expansion in CRK

Will be hard for PAL to find 2nd hand A321neo powered by P&W PW-1100G GTF! As for the B787-9 it has a better chance finding 2nd hand frames. But powered by Trent 1000 engines could be a stop-gap option?

[Arianespace]

Evodesire wrote

...But honestly, was there no other alternatives but to return new leased planes? Or there would have been a way to get rid of the old ones and keep the new ones but people that time just didn't know because they were basically non-airline people?

There really was no alternative but to return new leased planes because they cost more $ to keep. The old ones does not.

The drawback, when they are on maintenance schedule, or unexpected maintenance, then you fell the pain of its absence. Because it does not earn anything or contribute to your income. This was the strategy before to shore up balance sheet. But does not produce economic value while on the ground.

Was it the right decision? Of course, considering the circumstances they were in.

Would it be the best option? Perhaps not. But then, you have to convince aircraft lessors to agree with you. In fact, for them to agree alone is for Lucio Tan to put $500 million more. In short, PAL really has no choice but to clip its wings.

[JNC03]

And wait for their new aircraft orders I guess

[XWB_flyer]

Yeah, if I remember back in 2021, many in the industry were anticipating it would take years for the industry to recover 3-5 years, so 2026, which is when delivery for the A321neo resume. I wonder if Airbus supply issues will affect their entry into service? As for wide-body aircraft, it seems that any new aircraft will take years,  which is really  frustrating. A solution would be 2nd hand aircraft, which can serve as a stop-gap solution until newer aircraft have entered service! Also startinc to wonder if 2nd hand aircraft are still on the cards or have been abandoned with both Airbus and Boeing are aggressively pitching newer aircraft with early delivery in less than 3 years?

[Arianespace]

Quick recovery was never anticipated. Even major EU carriers failed that projection. And so does PAL following the trend that it would bounce back only by 2026. They were wrong. Dead wrong. They are now late in the game by three years, fleet planning wise. All is not lost though as PAL try to recall returned planes.

CEB took different view and is reaping rewards now. No wonder they are contemplating transfer to NMIA this early. If you take a look at their risk aversity, they were the first airline to used T3 and reaped major rewards from it despite tremendous headache. As it has grown T4, it has also outgrown its shell tremendously at T3, and is now looking for a much bigger shell at NMIA. T3 could not handle 12 more 339s in their portfolio. With 15 million passengers in tow now, a future NAIA operator would suddenly lose this huge market upon their departure to a much bigger airport. this is one reason told to me why NAIA consortium would want to bind airlines while it can still hold capacity for them. They are afraid to lose 20 million passengers at an instant. This is also the reason why they took JG summit to join them to convince it not to leave, in case they win the contract.

For PAL, their future really lies with NMIA. If it wants to grow, it must embrace the bigger airport. If it wants its animosity with RSA stay, then we will probably see them stagnate like what they are now. I would gladly see this as the second worst decision they make.

[XWB_flyer]

Business is business, just hoping management put aside their grivence about RSA and SMC, foucs on making PAL a profitbale airline and embrace NMIA as their main transpacific hub. As for NAIA I still think it will be better as a major domestic hub for flight from Manila to different parts of the Philippines while offering a few international flights mainly around East and South East Asia.

[Arianespace]

In addition to my post above, to see a view differently from CEB, fails to consider this industry secret,

https://www.philstar.com/business/2023/03/10/2250484/cebu-pacific-places-most-order-aircraft-among-sea-carriers

In Southeast Asia, Cirium said budget airlines like Cebu Pacific are set to receive the  majority of the aircraft orders.

Cirium said that Cebu Pacific placed an order for 45 aircraft, followed by AirAsia X’s 35, and Scoot and Malaysia Airlines, both of which have 34.

Cirium expects demand for air travel in Asia and the Pacific to recover to pre-pandemic levels by November this year.

Further, they are expanding their fleet to ensure that supply can keep up with demand like Cebu Pacific, which is eyeing to spend as much as P42 billion for capital expenditures in 2023 mainly for the addition of 15 aircraft to its fleet

What does PAL have to offer this May?

[XWB_flyer]

Besides the 13 A321neo and option for 6 A350 XWB which could be turned to firm orders for the larger A350-1000. That is a grand total of 19 aircrafts which won't start entering service until 2026 the earliest. Not including the B787-9!

My question is how many can PAL afford to buy and will it be enough to operate both transpacific and inter-asia flights?

[JNC03]

Will PAL announce the 787 order earlier because of Marcos Jr's US trip since they are focused on the economic and defense talks

RP-C7772 will be utilized as PR1 and will land on Joint Base Andrews tomorrow early morning Philippine time

[Evodesire]

This is what makes CEB different from PAL. CEB is very aggressive. They foresight well, they take risks, they manage them, then later on reap the rewards. PAL is too conservative, waiting for others to go first until its too late. I am sure when PAL forecasted that aviation will return only in 2026, CEB had a different take.

CEB knows the game and they are in touch with reality. I am hoping though that Capt Stan's team is too, except it seems they have to rectify some decisions made by the Viv-GSM group.

Now the question is, can they renegotiate the deliveries of the remaining 13 A21Ns? Also, will they be leasing used long range planes first while awaiting new aircraft? I understand 7781 is still stored due to the supply problem of parts.

[Evodesire]

AFAIK, Capt Stan will be on the trip. Why? Your guess is as good as mine.

[JNC03]

At a summit on Monday, May 1, US President Joe Biden and Philippines counterpart Ferdinand Marcos Jr. are expected to reach agreements on greater business engagement, as well as “military enhancements” amid shared concerns about China, a senior Biden administration official told Reuters.


Ah business engagement🤔🤔

[XWB_flyer]

Fingers cross on the B787 Dreamliner order and possible stop-gap aircraft like 2nd hand B777-200/LR and NTU B777-300/ER or B787s are also possible. Although PAL will unlikely to take it I won't be surprised if Boeing try to squeeze-in the B737 Max as an alternative to the A321neo or as a replacement for the A320-200.

[XWB_flyer]

PBBM and First Lady Arrived at Joint Base Andrew with RP-C7772 operating as "PR001"  
https://youtu.be/C1EjYuztIx4

[Arianespace]

It has something to do with Maharlika Investment Fund and Eximbank based in New York. Figure that out while not on the news yet.

[JNC03]

The EXIM Bank is the official export credit agency of the United States. Their mission is to support American job creation, prosperity and security through exporting (exporting Boeing planes). They accomplish it by unlocking financing solutions for U.S. companies (Boeing is a US company) competing around the globe (PAL is a foreign customer of Boeing a US company).

[JNC03]

I remember EXIM Bank provided  $811 million loan guarantee to help finance the sale of Boeing 787s to  Air France-KLM last year.

[JNC03]

To add EXIM helped Boeing before to sell 747-400C to PAL in 1996 to help the airline service LAX and SFO routes. Some of there 747s before are financed by EXIM thru leases.

In modern times they also helped in acquiring Boeing 777-300ER

[Arianespace]

Remember this post few days ago?

Arianespace wrote

PAL official admits that the airline is feeling the pain of having not enough planes to fly and having ageing jets. The rest of their fleet apparently is on the ground unable to fly and not earning money for them...

Well, Stan just confirmed these words yesterday on the plane to Washington.

Persistent supply chain woes and competition with global carriers for spare parts and planes continue to ground Philippine Airlines’

The lack of aircraft and parts can also cause operational issues such as flight cancellations apart from in-flight inconveniences such as busted tray tables and seat recliners.

We are working to resolve those issues with our suppliers.
 

And he also acknowledges difficulty securing their old planes back, as well as finding leased ones.

“If we can get more planes we can expand immediately but we can’t,”

"PAL would not be launching new long-haul routes this year."

Apparently activating 'return' planes will need to undergo PMS before returning to service, and parts acquisition is 'pahirapan' nowadays.

And he also confirms the impending orders. I told the forum about this that Airbus was speaking to him last month. So they gave him 2 years for a new plane. Aha, gotcha!

"Getting the planes back has been difficult and the soonest they can acquire brand new aircraft is in 2025".

“There’s a plan to finalize but it will take two years to deliver the aircraft,”

Remember too, about buying old planes, well he spoke my line too. What a coincidence...

"Buying used aircraft was also not an option due to the cost and time needed to reconfigure the interior of the planes to fit their business model"

https://business.inquirer.net/398682/lack-of-aircraft-competition-impeding-pal-growth-says-ng