Airlines In The Philippines II

[JNC03]

https://palrecovery.com/

PAL's website dedicated to their announcement of chapter 11 filing  and plans recover

[Arianespace]

PAL has secured deal with creditors. Approves restructuring plan. Will just  wait for official court pronouncement sealing the deal. This is what makes prepacked insolvency good. All the parties already agreed for settlement with lessors opting to get some haircuts on income.

[JNC03]

What is the final number of planes that will be returned to lessor?

[Arianespace]

approx 25 airccraft. Mostly new ones.

[JNC03]

What types?
How many per aircraft types?

[Evodesire]

To be retained based on the post on this site

5 777s
3 A350s
5 A330s (3 tri-class, 2 bi-class)

Will all A321neos be retained?

[Arianespace]

PAL will retain 3 21n. The remaining 5 will be returned.

So from 98 down to 70, which means PAL is returning not 22 but 28 planes. At the time of the press conference though, 6 planes which includes 2 A359,  2 A333, and 2 A321s left the fleet in gradual phase already.

[Evodesire]

First time to see an airline restructure by leaving the old aircraft in the fleet and letting go of the new ones. I wonder how they will remain competitive in the long run against other airlines boasting newer and more efficient aircraft.

[Arianespace]

Not exactly true. They have mixed fleet of old and new ones. Most of the new ones were let go because PAL can't afford to keep them. Lease of new planes are expensive compared to old ones.

Basically, they have overcapacity of planes they don't need and continued to pay leases without necessarily earning for them so they have to go.

Honestly, right now, you need to fill a plane. If you can't do that consistently the miracle of new technology and "efficiency" will not work to your advantage.  

According to IATA, world airline travel will equal 2019 level only in 2026, at the earliest, if the pandemic ends now, which it isn't.

[Evodesire]

Actually, my concern is for the narrows. Particularly the choice to keep A321ceos over the NEOs. CEOs can burn 3000kg of fuel per hour. The NEOs burn is 2000kg per hour. The difference is huge. Lease-wise, yes the latter may be more expensive. But efficiency-wise, it will have its savings in the long run.

I was also told that in a recent town hall, GSM reiterated that PAL will compete with the likes of CX, SQ, etc. But how can they do so with bare airplanes?

I understand that survival is important now, but the arena will become very competitive once again in the future. Plus again, GSM's goal of competing against premium carriers.  

[Arianespace]

If you think CX and SQ is in better place, think again. CX is slowly being killed by its government due to its 0 tolerance for Covid. It recently lost $2.8 billion in 2021. PAL and CEB got a bitter dose of that pill.

The reason for them floating was the extensive aid it got from their government, even if they lost 98% of their passengers from 2019 level, while PAL never get to receive a billion US dollars of support. At most it got is about US$300 million for repatriation and vaccine flights.

You may want to read this to broaden your perception about things.
https://www.scmp.com/news/hong-kong/hong-kong-economy/article/3144627/cathay-pacific-reports-hk76-billion-loss-first

There is no operational efficiency on an empty plane. That is basic economics. One CX flight from LHR carried only 7 passengers to HKG. Do you think the A35K efficiency work wonders for that flight? Certainly not.

And that is the whole point of these exercise. Survive first before you think of growing.

[XWB_flyer]

I wonder what will happend to PAL remaining 21N on order. I've read an article from Nekkei Asia there is a possibility of them being cancelled although they ve already been deferred to 2026-2028 so I say it will be 50/50. Also will they be in the same configuration as 9937 and 9938? Or will they have an alternative ACF configuration? Alternatively they PAL could converted some of there A321neo to A320neo and A321LR or XLR in the medium term to replaced the lost A321neo!

[Arianespace]

13 21N orders were definitely deferred 2028-2029. According to the restructuring agreement still to be approved by NY court, all will be taken subject to conditions. What these conditions refer to after approval is how much swiftly the industry bounces back pre-pandemic levels. Otherwise they may have to surrender about 6-7 of them, and will just take 6 frames by 2029. Nothing is said about its configuration.

But judging how they reduce their A330 fleet will give you some idea of what will they take come 2028. Note, the airline does not say anything about it. Just my speculation of what to expect from them in the future. This happens to be how far the XLR can go to at 4500nm, inclusive of diversions and fuel reserves and about 180 pax. PAL will have an easier time selling out seats than they would on a widebody and schedule multiple flights. They can even fly AKL direct.

 

[Arianespace]

Arianespace wrote

I have known about this problem last June. Doesn't have the confirmation yet so I did not disclosed it. Now it's been confirmed. Name of the bank however was not disclosed. PAL is dealing with these banks BDO, Landbank, DBP, BPI, Chinabank. There was one more i forgot. they will be bankrolling about US$300 million. All gov't banks are ok so it must be the private ones. This is also the reason why Yu resigned because he got words of help and commitment from this bank but the bank did not signed the guarantee. Without this bank the rehab proposal cannot succeed because of inadequate financing plan.

Remember the bank that caused the delay of the Chapter 11 filing? The reason why Greg Yu resigned?

I said in August the name of the bank was not disclosed but I knew who they are dealing with. Guess what, the book is open now. Read on,

It is also heard from the banking community that Bank of the Philippine Islands (BPI) backed-out of the lending facility due to the “comfort letter’ issue. In its stead, China Bank, Philippine Bank of Communication and Asia United Bank, each poured-in $75 million and $25 million from Sterling Bank. The exposure of these four banks is fully collateralized with prime assets owned by LT group of companies. Completing the $505 million required new money will be coming from no less than Kapitan, himself.

Another fund-raising drive is currently in the works since PAL needs $150 million to bankroll its operations. Also heard from the banking community that Land Bank of the Philippines and the Development Bank of the Philippines are willing to lend, a 360 degrees turn around from no-no policy in the past.

Finance Secretary Carlos “Sonny” G. Dominguez has a sweet spot for the flag carrier. He chairs both financial institutions. It was also said that Dominguez fully supports the Chapter 11 move and is willing to assist in the financial recovery of PAL that he steered in 1993-1995.
https://mb.com.ph/2021/09/17/in-realm-of-possibility/

It was Asia United that I missed. And yes, information provided to me in confidence was spot on. A month before they blew out.

[Arianespace]

Heard from the grapevine. It seems the 3 very long haul gateway is here to stay. The taipan just overruled the ceo.

[Arianespace]

You might as well look at this latest reshuffle

Taipan Lucio Tan has issued a public advisory, saying that his son-in-law Joseph Chua is not authorized to represent the Tan Group of companies and the family itself.

“The public is hereby notified that Mr. Joseph Chua has no authority to represent Dr. Lucio C. Tan, the Tan Family and Lucio Tan Group of Companies. Any prior authority of representation given to Mr. Joseph Chua are deemed void and or revoked,” said a newspaper advertisement published yesterday.

https://www.philstar.com/business/2021/10/07/2132241/lucio-tan-cuts-ties-son-law

[peterpiloto]

Fleet Withdrawal update as of October 15, 2021

A350
RP-C3506
RP-C3503

A330
RP-C8762

A321
RP-C9910
RP-C9911

[Evodesire]

Will they be returning RP-C3507?

[majaba]

Hi Arianespace,
Royal Air wants E-jets in future? Is that disclosed information please? Thanks for you reply....
Richard.

[JNC03]

What did you mean by E-Jets
Elelctric Jets or Embraer Jets?