Airlines In The Philippines III

[JNC03]

Cebu Pacific firms its 152 aircraft order
70 are firm and the rest will be flexible options, meaning it can be any variant of the A320neo family

[Gustavo J Oppenheimer]

Some of them can be the LR and XLR variants as per Alex Lao

https://www.flightglobal.com/airlines/cebu-pacific-studying-business-case-for-longer-range-a321neos-cco/160155.article

[Arianespace]

PR 124 flew, while PR 104 went kaput. Well done Philippine Airlines.





Did United already bite?

[JNC03]

Boeing greeted them for the successful flight utilizing 77W

[Arianespace]

PR104 on October 5 also cancelled.



Tipid pa more!

Or do we see a trend United moving away PAL passengers to SFO?

And if that is the case their 35k densification project would probably not bode well for them.

[romantic_guy08]

2P will also ax Pagadian flights starting Jan 15...

[seven13]

Arianespace wrote

PR104 on October 5 also cancelled.



Tipid pa more!

Or do we see a trend United moving away PAL passengers to SFO?

And if that is the case their 35k densification project would probably not bode well for them.

very pathetic indeed and very short sighted management team (some). what more when UA enters CEB. patay lalo ang NAm flights

[JNC03]

PAL and Boeing had a meeting earlier

[Solblanc]

JNC03 wrote

PAL and Boeing had a meeting earlier

Well, PAL already announced that they’re not doing anything until 2025. Is this just a formality? Boeing is likewise not in any position to deliver, in both a literal and figurative sense.

[Evodesire]

UA has been winning the MNL-SFO market lately from PAL. Wait until DL starts LAX - MNL. Also CEB is not interested in going west coast via a long-haul amidst a lot of pushing. They are sticking to their "within 4-hour distance" network plan and a few ME and Aussie routes.

[Evodesire]

They've been having meetings but nothing is coming into fruitation. Maybe the Tans making tawad too much as though they are in Divisoria.

[Arianespace]

PAL axe Beijing in October 2. Manila services to China would be reduced to only Hong Kong, Jinjiang, Shanghai and Xiamen for its flight network beginning winter 2024 season.

Airlines in Philippines cut China flights on lower demand amid sea row, online casinos ban

Flag carrier Philippine Airlines (PAL) has also reduced flight frequencies to China, retaining only a few routes, including Shanghai and Xiamen.

“PAL’s decision to reduce flights to China aligns with a broader trend, as the Chinese market has been slower to recover compared to other regions following the pandemic,” Carlos Luis Fernandez, the firm’s executive vice-president, told The Philippine Star.

https://www.scmp.com/week-asia/politics/article/3280692/philippine-airlines-cut-flights-china-lower-demand-amid-sea-row-online-casinos-ban

On the other side of the coin, Chinese carrier flights to Manila is growing by leaps and bound. Sometimes you wonder whether it was really slow traffic that caused suspension or something else. The better part of me would believe the latter.

[Arianespace]

Solblanc wrote

Well, PAL already announced that they’re not doing anything until 2025. Is this just a formality? Boeing is likewise not in any position to deliver, in both a literal and figurative sense.

I think the 2025 announcement has something to do with a "change of heart". Which heart they are not telling me. Best guess would be a departure from Boeing plans. As Solblanc pointed out, they are clearly not in any position to deliver, both in literal and figurative sense of the word, widebody and narrow-body orders before the end of 2030.

Lessors however have pending orders from Boeing which then offered to PAL for leases. There might be disagreement to lease rates why the change of heart considering these are in demand aircraft with 5 or more years of wait. Airline said the Boeing package (B787s and max) is good. Operating leases however are more expensive than financial leases. That is reality. Consider too other airlines are wanting these frames for themselves. So they bid higher to get these birds. Naturally, rates would go high. This could be the reason why BOD put its foot down for the rent being unreasonably expensive. Which is true, if we follow the rules on supply and demand, because it perfectly fits the bill.

This perception is shared by other people more competent than I am.

The general sentiment for 2024 is that values and leases will continue to soar throughout 2024 with this movement attributed to several industry factors.

This includes the current tight supply, driven by lease extensions, current engine reliability issues and a lack of new aircraft deliveries.
https://www.iba.aero/resources/articles/aircraft-values-lease-rates-update-february-2024/

PAL designs Boeing to fit in their plan for the next 20 years. BOD seems to have other plans. With that in mind, I am tuned to believe that they will end up extending leases of the 77w and retrofit them for use on the next 6-8 years, just like CX did to their fleet. The 333 fleet is already in the process of being retrofitted. With leases going up and delivery schedules 6 years away, the best immediate way is follow what CX did. It is cheaper that way and faster too, while they ride the time when schedules are no longer tight. Same sentiments from the professionals.

[Solblanc]

Arianespace wrote

Solblanc wrote

Well, PAL already announced that they’re not doing anything until 2025. Is this just a formality? Boeing is likewise not in any position to deliver, in both a literal and figurative sense.

I think the 2025 announcement has something to do with a "change of heart". Which heart they are not telling me. Best guess would be a departure from Boeing plans. As Solblanc pointed out, they are clearly not in any position to deliver, both in literal and figurative sense of the word, widebody and narrow-body orders before the end of 2030.

Lessors however have pending orders from Boeing which then offered to PAL for leases. There might be disagreement to lease rates why the change of heart considering these are in demand aircraft with 5 or more years of wait. Airline said the Boeing package (B787s and max) is good. Operating leases however are more expensive than financial leases. That is reality. Consider too other airlines are wanting these frames for themselves. So they bid higher to get these birds. Naturally, rates would go high. This could be the reason why BOD put its foot down for the rent being unreasonably expensive. Which is true, if we follow the rules on supply and demand, because it perfectly fits the bill.

This perception is shared by other people more competent than I am.

The general sentiment for 2024 is that values and leases will continue to soar throughout 2024 with this movement attributed to several industry factors.

This includes the current tight supply, driven by lease extensions, current engine reliability issues and a lack of new aircraft deliveries.
https://www.iba.aero/resources/articles/aircraft-values-lease-rates-update-february-2024/

PAL designs Boeing to fit in their plan for the next 20 years. BOD seems to have other plans. With that in mind, I am tuned to believe that they will end up extending leases of the 77w and retrofit them for use on the next 6-8 years, just like CX did to their fleet. The 333 fleet is already in the process of being retrofitted. With leases going up and delivery schedules 6 years away, the best immediate way is follow what CX did. It is cheaper that way and faster too, while they ride the time when schedules are no longer tight. Same sentiments from the professionals.

Interesting that you mention CX… CX also ordered the A330NEO, which happens to have the lowest lease rates on your graph. And it’s also available. T’Way just announced recently that they’re leasing A330neos from Avolon, which is another creditor of PAL, yes?

Surely even a lease of 5 A339s if only to properly serve Australia is better than cancelling Dammam and wet-leasing Wamos?

[JNC03]

A320s will be a different story right?

[Evodesire]

Arianespace wrote

On the other side of the coin, Chinese carrier flights to Manila is growing by leaps and bound. Sometimes you wonder whether it was really slow traffic that caused suspension or something else. The better part of me would believe the latter.

If I recall, Chinese carriers are doing better in international flights than domestic. This was reported on Simple Flying. As far as flights from the Philippines are concerned, AirAsia PH cancelled all its China flights while Cebu Pacific still doesn't serve Beijing. As for PAL, you are correct. Maybe both reasons. Lack of demand to China and at the same time, lack of planes.

[Evodesire]

Arianespace wrote

I think the 2025 announcement has something to do with a "change of heart". Which heart they are not telling me. Best guess would be a departure from Boeing plans. As Solblanc pointed out, they are clearly not in any position to deliver, both in literal and figurative sense of the word, widebody and narrow-body orders before the end of 2030.

With the departure from the Boeing plans, what's now going to happen to the PALexpress A320s, considering that they will only stay til 2027? AFAIK, Boeing also halted production of the 737 due to the ongoing machinists strike. 2027 is 2.5 years from now.

Delivery of the A321Ns has been deferred. While some are speculating that the cause is Airbus and the supply chain issues, I am thinking otherwise. If PR will be reconfiguring the A321ceos and 2P only has until 2027 to operate those A320s, how will they cover that without an order by 2025?

[Arianespace]

Solblanc wrote

Surely even a lease of 5 A339s if only to properly serve Australia is better than cancelling Dammam and wet-leasing Wamos?

First point, PAL wants to have a plane that can fly both to EU and West coast with a decent payload. For obvious reason.The neo, while a capable plane couldn't do that.

If repeated SFO cancellation is an early indication, PAL doesn't need a high capacity plane given a direct competition. Never thought of that before. But they have, thus the insistence of a smaller Boeing which can carry 300 people less than the 360 pax 35K would. More like what the 330 is doing to LAX now. If it happens in SFO it could happen to LAX with DAL around the corner.

Second point, CX ordered the neo because they are NOT retrofitting the old A330. Which means they are retiring it. PR on the other hand is retrofitting for the third time their A330. Which means they intend to use it beyond 12 years. If indications of a new order is forthcoming, retrofitting would not be an option. Still, PAL 330 is younger than CPA at 10 years old. They can still fly 6 years more, if we follow PAL retirement policy.

Of course PAL understood they could never order the Boeing in the next 6 years, the reason why Boeing offered them the lease options from lessors, with rate sweeteners dampen from the package max.

Third point, CX retrofitted their 77w to operate 6 years more because of delay in the delivery of the ordered 779s. While there is no substantial delay in the delivery of PR 35k, there is however a long waiting time for the delivery of a smaller plane designed to fill leaner routes in America and Europe as explained in point number 1. The A359 would have been okay if they are less expensive than the Boeing.

As this report suggest, they are actually true.


https://www.iba.aero/resources/articles/aircraft-values-lease-rates-september-2024/

With that in mind, aside from the 35k they have, no other widebody planes is forthcoming for them to service the routes that they suspended and fly for leaner routes they envisioned. If they find lessors for A330s they could have find it by now, and not went to wet leasing. The Wamos contract extension indicates dire supply problem for widebody aircraft as shown in the report of my previous post.

If BOD continue to put its food down, their only alternative is retrofitting the newer 77w other than 3 frames that is set for retirement, as the 35k arrives. In fact, JED was cut because it was always flown with block seats on their high density 330s. They couldn't fly the xx8x in KSA because of product inconsistency. The 77w would do that with ease, as well as flight services to Oz and kiwi island.

And with lease rates mentioned in that report above, its already a bargain for the thrift airline.

While NEO is  a good plane, there is limit of what it can and cannot do. The 77w addresses them with a discount.

[Arianespace]

JNC03 wrote

A320s will be a different story right?

Yes

[Arianespace]

Evodesire wrote

With the departure from the Boeing plans, what's now going to happen to the PALexpress A320s, considering that they will only stay til 2027? AFAIK, Boeing also halted production of the 737 due to the ongoing machinists strike. 2027 is 2.5 years from now.

Delivery of the A321Ns has been deferred. While some are speculating that the cause is Airbus and the supply chain issues, I am thinking otherwise. If PR will be reconfiguring the A321ceos and 2P only has until 2027 to operate those A320s, how will they cover that without an order by 2025?

As far as what was disclosed to me, the max is packages with the 787, perhaps with the rates of the max as sweetener for the expensive rates of the latter. Speculative but plausible. Meanwhile, Airbus package the 320neo with the 330neo. But not much has been said about it. Could be the thrust by next year if Airbus could convinced PAL that neo could actually fly LAX at the configuration they desired. Aircalin already flew the longest 339 route at 14 hours flight time from Paris to Singapore, similar to LAX-MNL, but with lesser seat count than the 787 would, and perhaps a fewer balikbayan boxes on its belly, which actually defeat its purpose, as this is what Filipinos are known for when returning home on VFR to the Phiippines, which PAL planners actually wanted to be served.

Supply chain issues was confirmed in this forum a long time ago, since the war in Ukraine in 2022 and the economic sanctions imposed to Russia. Most components are sourced in Russia, like titanium for example that is fitted in P&W gtf engines or the cfm leap engines. In fact, we are victims to that sanctions games because we cannot get the Russian helicopter that we ordered from Russia. Good thing Duterte has good relationship with Putin, and we are not on the list of unfriendly countries to Russia. Proof of that is PAL overflying Russian Airspace. Japan and Korea couldn't do that. We can. Just observed JFK and YYZ flights to MNL.