Airlines In The Philippines III

[Evodesire]

ewh1 wrote

At the root of it though, maybe when the figurehead steps down and eventually passes, there will be a psychological shift in culture. I have a feeling there's still an unspoken internal presence directing PAL and probably all the companies which in all honesty, is holding them back. Until then, it seems like they always need an outside presence to push them to take action and/or fix their ways.

Sadly, there are different Tan families with different dirrctions and mindsets vying for control over PAL, and that is their greatest downfall. Until such time the family comes into their senses to just allow the executives to run the airline without sticking their noses in too much, PAL will just play second fiddle to 5J and other carriers around the region.

And yes, I noticed that their too much being conservative with their decisions is what's killing them slowly. They are usually "last" to innovate their products. They wait for others to do things first before they do it.

So this makes me wonder how PAL is reacting to Cebu Pacific's massive order.

[Evodesire]

JNC03 wrote

The CEB officials led by Lance Gokongwei, president and CEO of JG Summit Holdings, Inc., which owns Cebu Pacific, informed President Marcos of its investment plans and government support to keep the Philippine aviation industry competitive.


https://pco.gov.ph/news_releases/pbbm-welcomes-cebu-pacifics-fleet-expansion-ceb-says-fleet-investment-a-stamp-of-confidence-to-ph-economy/

This was supposed to be the job of the national flag carrier, which they are failing to do.

[AB350]

Thanks for the info this those clear stuff why LT manages PAL the way it those, their have been two possibilities where the Philippine Goverment could take over PAL again first in 2011 and second in 2020-2021 during COVID and subsequent Chapter 11 Bankruptcy Protection. But in both case neither happned! Though with the LT Group seemingly in decline I wonder if they will be willing to sell PAL or let someone with vision take the helm like Cebu Pacific with Lance Gokowei?

[Evodesire]

They don't have to sell it if they don't want to. Just change their ways of managing things. Trust the decisions of their executives. No matter how competent the executives are, if you have the Tan family always intervening with the decisions, treating it like a family corporation, then the decline will lead to a downfall. If the executives want to be more aggressive, let them, especially if its for the good of the airline.

PAL has went through three management changes the last 5 years and it is still the same old banana. Executives in PAL now are younger and more aggressive. Except, they are in the mercy of the family decisions because anytime someone goes against the Tans, they are shown out the door.

Either the Tans change their ways or just sell PAL to someone who will manage it well. And yes, I hope it would be sold to the JG Summit Group.

[JNC03]

Lance Gokongwei reveals how Cebu Pacific sealed PH’s biggest aircraft deal ever

“Let’s start with the premise: Why are we buying the planes?” he said. “It’s simple: We want to support growth in the Philippines with its [expected] 6% [average annual] growth rate and the demographic dividend. Then now, finally, the government's push for infrastructure, including the privatizations, is very encouraging,” he said, talking about positive developments in the country’s existing or upcoming airports. “So now is the right time: We have NAIA. We have Bulacan. Clark is already privatized, and a few other airports are going to be privatized.”

“Definitely, with more destinations to fly you, you’ll need more planes,” Gokongwei said. “Hindi na Manila na lang. There are more alternatives. So we conducted a shootout between Boeing and Airbus, he said. And in the end, the Airbus-Pratt & Whitney combination won, because for us, they provided us with the best economic outcome.”

He explained that, in terms of the all-important profitability metric of “total cost of ownership per seat kilometer per passenger” Airbus won because its latest generation of A321 and A320 aircraft offered airlines the lowest operating cost for narrow-bodied — meaning single aisle — jets.

“Pratt & Whitney is beginning to resolve the [engine maintenance] issues,” Gokongwei said. “We're confident the problems will be resolved over time. And they have a very long term contract with us to support these engines.”

Pratt & Whitney’s troubles have caused it to lose market share against competitors like GE, but Gokongwei declined to discuss whether this gave Cebu Pacific leverage to negotiate for lower prices for Pratt & Whitney’s GTF (Geared Turbo Fan) engines that will power the airline’s new planes. “I guess they gave us a very competitive offer,” he chuckled.

“In fairness to Boeing, they gave a very strong offer,” Gokongwei said. “But I think the combination of Airbus and Pratt & Whitney gave us superior economics.”

Was this threat of shifting to the US plane maker a ploy — a stalking horse — to extract a better deal from its longtime European suppliers?

“No, no, no, no. We very seriously considered [Boeing],” he explained. “I think they put their best foot forward and we're grateful to them for participating in the RFP (request for proposal).”

But buying new airliners is not like shopping for new clothes in a department store. The wait for new plane deliveries from major manufacturers can be as long as ten years if one joins at the very end of the line.

But not so for Cebu Pacific, even if the line is long for the in-demand Airbus A320 family of jets.

“They set aside good delivery times for us,” Gokongwei said, hinting that the budget carrier’s orders will be expedited because of its standing with the European aerospace giant. “We’re a key customer for them. That also helps.”

Besides, he noted that deliveries for the 152-jet order announced on Tuesday will be staggered well into the mid-2030s. “Our current plane orders end in 2027, I think,” he said, before the new batch of planes arrive between 2028 to 2035. “May outstanding [deliveries] pa kami.”



https://insiderph.com/insider-insight-lance-gokongwei-reveals-how-cebu-pacific-sealed-phs-biggest-aircraft-deal-ever?

[Arianespace]

This is a glimpse of what is inside the family, who is in control.

Wife Carmen and children move to consolidate control

In the case of tobacco, beer and airlines tycoon Lucio Tan, his wife Carmen and their children are taking control of the family’s business empire, valued at $3.6 billion according to Forbes.
https://bilyonaryo.com/2019/06/20/lucio-tan-empire-in-transition-wife-carmen-and-children-move-to-consolidate-control1/

Two and half years since the death of Bong Tan, his 29-year-old son has been crowned the heir apparent of the business empire of Lucio Tan.
This is thanks to Carmen, Tan’s first wife and Bong’s mother, who handed over her powerful post as vice chairman (VC) of LT Group (LTG) to Lucio “Hun Hun” Tan III, during the holding firm’s stockholders meeting on May 5.

https://bilyonaryo.com/2022/05/05/carmen-seals-first-familys-control-of-lucio-tan-empire-after-giving-control-to-hun-hun-easing-out-mike/business/

The better business minded Tan, Michael happens to be in the second family of 5 children, son of Lucia “Letty” Gonzalez-Tan, whom LT has more fond of. So he was eased out in favor of his nephew LT III, son of Bong Tan, the only son of Carmen and Lucio.


And its not fine weather inside the first family too. Mind you, the latest family count was 13.

Eldest Rowena Tan is married to Joseph Chua. Now Joseph is Carmen's favorite son in law. Yet, he and the eldest Tan daughter was eased out of the family business. Chua was ejected from the family business due to “financial matters.”

He was replaced by the younger sister, Jeselyn Tan Yu

This is the back story,

Tan’s auditors stumbled on several property purchases in Guam made by Chua allegedly using funds of Macroasia without authorization.

Among Chua’s egregious flops were Macroasia’s entry into mining (Tan is not a fan of the business) and the ill-fated Kalibo ferry which cost Philippine Airlines P774 million in losses.

“Whenever Tan got fed up with Chua and wanted to kick him out, Carmen would passionately intervene for her favorite son-in-law. She’s the only reason he stayed that long in the family business,”

https://bilyonaryo.com/2021/10/17/murky-deals-in-guam-allegedly-got-joseph-chua-evicted-from-lucio-tan-empire-daughter-gigi-tan-yu-takes-over-guam-operations1/business/

The real story however was explained straight from the horse's mouth,

Joseph Chua breaks his silence
https://www.philstar.com/business/2021/12/20/2148951/joseph-chua-breaks-his-silence

https://www.philstar.com/business/2021/12/27/2150217/joseph-chua-wait-theres-more

Guam-based investigator thought otherwise, as these companies were linked to "panama papers", concluding there was pilferage of the old man's money.

https://kanditnews.com/tan-companiess-ownership-and-cash-flow-rerouted-following-chuas-firing/
https://youtu.be/MMLDrYPXTso

To wrap it up,  according to Chinese tradition, first son is the most important, and considered to be heir of the family. The first son was Michael Tan from the second wife. Carmen's first born is female, Rowena. Bong Tan was born after Michael and the 5th child of 7 children. Following tradition, Lucio Sr. wanted Michael to take over the family business. Carmen had other idea. Put Bong instead. But he died.

Now it should have been Michael again. But Carmen again screw Chinese tradition by installing her daughter Veviene Tan. There was indeed disturbance in the force after earnings dropped. None more apparent than the flag carrier.

To bring balance to the force, booksmart LT III was brought by grandma Carmen in a bid to appease the Chinese God. But still screwing tradition. Meanwhile, the business savvy, streetsmart, and JJB groomed Michael was put in the sidelines. All because he came from the second family. Interesting isn't it!

In conclusion, 7 women decides PAL fate.

[AB350]

How are those 7 Women and also isn't Vivan already removed from the board of directors?

[Arianespace]

Lucio and Carmen has 7 children

[JNC03]

I wonder how will they bring innovation to PAL and adapt to changing market we have

[ewh1]

I remember GMA during her rein, once toyed with the idea of renationalizing PAL as a way to increase tourism and trade like Thai Airways and Malaysia Airlines. Her people probably talked her out of it though for good reason!

[Evodesire]

Greatly explanation! Now we know where PAL is headed.

Hoping that Lance will relive his father's dream of flying to the US. Not as Cebu Pacific, but as a legacy carrier separate from Cebu Air, but still under the JG Summit group.

While PAL is heritage and it is nostalgia to us, we now know where they are headed. Sorry to say. Reason why PAL can never move on. It's like Carmen and the others don't like progress, but they talk too much BS "PAL is the Philippines, and it is my father's dream...". Crap!

[Evodesire]

JNC03 wrote

I wonder how will they bring innovation to PAL and adapt to changing market we have

We can only dream and just wish PAL is now a hopeless case under the Tans.

Better to have a second legacy carrier in the Philippines. Just like ANA and JAL. But look at where ANA is over JAL.

[Solblanc]

Evodesire wrote

JNC03 wrote

I wonder how will they bring innovation to PAL and adapt to changing market we have

We can only dream and just wish PAL is now a hopeless case under the Tans.

Better to have a second legacy carrier in the Philippines. Just like ANA and JAL. But look at where ANA is over JAL.

It all boils down to the infrastructure.

Cebu Pacific is profitable. They won’t cannibalize their own NAIA slots to make a second full-service network happen.

RSA can try to start his own airline, but again, no slots in NAIA.

In the same vein, even PAL isn’t able to provide good connecting itineraries for destinations outside of nrt/hnd, icn, hkg, sin, bkk, and lax. Every other destination on the network just doesn’t have enough frequencies, so you end up with long layover times, and those won’t get good yields.

While NMIA isn’t online, PAL has a pretty privileged position to take advantage of the largest international network in a slot-restricted airport. We’ll see what happens when NMIA opens.

[JNC03]

The difference now is Cebu Pacific is taking advantage of the NMIA and airport upgrades in the Philippines

They are preparing for it as airlines continue to scramble on new aircrafts securing their delivery slots early for 2030s. They secured their slots for the expansion of airports and the NMIA, by the time its done they are ready for it. Meanwhile if the new airport is there and you wait for your aircrafts slots might be given to other foreign airlines interested to flying in Manila and other local airline like 5J.

I think that aircraft order pressured the government and airport operators to ramp up the airports and give them a decent upgrade before those orders arrive from 2029 onwards

[AB350]

It seem the current plan is to moved all LCC to NMIA and keep the Legacy Carriers at NAIA? Honestly I was expecting NMIA to be the new International Gateway with NAIA becoming the new domestic airport for CEB, GAP, PAA, etc?

Have the Tans settled their issue with SMC?

[Arianespace]

ewh1 wrote

I remember GMA during her rein, once toyed with the idea of renationalizing PAL as a way to increase tourism and trade like Thai Airways and Malaysia Airlines. Her people probably talked her out of it though for good reason!

The latest re-nationalization plan was made in 2021 when LT Group offered to sell back PAL to the government prior to commencing c11. PAL President Sta. Maria was told by former PAL President Sonny Dominguez who was then Finance Secretary, telling them the government would lend them money if LT put additional capital. And the rest is history. Meanwhile, Cathay Pacific, Singapore Airlines, Malaysia, Indonesia, and Thai Airways went back to government control after massive capital injections to keep them afloat. In fact, local airlines were saved by our government when they were awarded cargo and repatriation contracts. Not enough to make you rich. Not inadequate either to make you poor.

Finance Secretary Carlos G. Dominguez III said he had met with local airline companies while the government was “studying various alternatives” to aid them.

Asked if ailing airlines could qualify for possible capital infusion under the proposed national emergency investment vehicle joint-venture of state-run lenders Development Bank of the Philippines (DBP) and Land Bank of the Philippines (Landbank), Dominguez said the DOF’s study was underway so they will be ready once the bill was passed in Congress and while its implementing guidelines were prepared.

Pending in Congress was a measure that will plunk at least P50 billion into a holding company to be formed by the two government financial institutions (GFIs), which will allow the government to pour equity investments into firms, which Dominguez had said must be “critical to national interest,” troubled with solvency problems.

Read more: https://business.inquirer.net/303837/dominguez-aid-for-struggling-airlines-under-study#ixzz8f0FrHUNn

[JNC03]

On the budget carrier’s plans for new routes, Mr. Gokongwei said the airline is considering destinations within the operational range of the new aircraft they ordered.

“Anything that is within our flying radius, about five hours. Both domestic and international. We’ve been adding a lot of flights lately. It is a function also of which airports are going to be privatized and are going to be opened up right away,” he said.

“When we get the longer range Airbus 321s, which are available from early 2026, then we can go up to a seven, eight-hour range on a narrow body,” he added.

https://www.bworldonline.com/corporate/2024/07/04/606018/cebu-pacific-eyeing-sale-leaseback-deals-for-airbus-fleet/


5J will take advantage of the A321XLR even though they will have all economy configuration by introducing 7-8 hours flights on a narrowbody aircraft.

[Solblanc]

JNC03 wrote

On the budget carrier’s plans for new routes, Mr. Gokongwei said the airline is considering destinations within the operational range of the new aircraft they ordered.

“Anything that is within our flying radius, about five hours. Both domestic and international. We’ve been adding a lot of flights lately. It is a function also of which airports are going to be privatized and are going to be opened up right away,” he said.

“When we get the longer range Airbus 321s, which are available from early 2026, then we can go up to a seven, eight-hour range on a narrow body,” he added.

https://www.bworldonline.com/corporate/2024/07/04/606018/cebu-pacific-eyeing-sale-leaseback-deals-for-airbus-fleet/


5J will take advantage of the A321XLR even though they will have all economy configuration by introducing 7-8 hours flights on a narrowbody aircraft.

Yup. India and Perth are within range with full passengers. Also Cebu to SYD/MEL. We’re gonna see some interesting city pairs.

[Arianespace]

JNC03 wrote

“When we get the longer range Airbus 321s, which are available from early 2026, then we can go up to a seven, eight-hour range on a narrow body,” he added.

https://www.bworldonline.com/corporate/2024/07/04/606018/cebu-pacific-eyeing-sale-leaseback-deals-for-airbus-fleet/

That is a ludicrous statement. The range of the 21n is only 2500nm if you fill it to the brim which CEB does. At most at 5 hours on 240 pax. LXR even worse. It does reach the eastern part of India though.





You can go further if you put LESS people on it. But then the LCC logic loses its meaning.

[JNC03]

They think that it can have the A330neo range on a A321neo form factor🤣

I wonder if they are thinking to introduce more premium seating with more space on that aircraft