Philippine Airlines said on Wednesday it is confident that it will return to profitability this year as its ongoing refleeting program is expected to cut fuel costs and increase yields, while a planned route expansion to US destinations should boost revenue.
In addition, PAL has already written off the cost of retiring 20 aging aircraft, which means this will no longer pressure profits this year.
“If you notice, we reported a loss of $250 million. That is the write-off of the old aircraft, but from now on we are confident that Philippine Airlines will be back to be profitable right away,” Ramon Ang, president and chief operating officer of PAL, told reporters.
Last month, PAL reported a substantial loss of P11.85 billion for the first nine months of 2013.
The flag carrier formally retires this month its Boeing 747-400 fleet, which will be replaced with the more fuel-efficient Boeing 777-300 ERs.
The airline’s fleet currently consists of six Boeing 777-300s; four Boeing 747-400s; nine Airbus 340-300s; 16 Airbus 330-300s; 11 Airbus 320-200s; six Airbus 321-231 and four Airbus 319-100s, for a total of 56 aircraft.
“But there are additional planes coming in, that will bring the total to 72,” PAL said in a text message to The Manila Times.
Twenty new aircraft have been delivered so far since Ramon Ang assumed the PAL presidency in 2012.
PAL announced in 2012 that total orders will be for 64 aircraft—44 Airbus 321s and 20 Airbus 330s. The 20 aircraft that have been delivered are part of the 64 orders.
PAL hopes to implement a more efficient fleet planning program from the deployment of its new aircraft, an expanded network, and further upgrading of service standards on the ground and in the air.
In a statement, Ang had said that “The year 2013 was a clean-up year for PAL as we went through the costly yet necessary fleet renewal process, but we are on track with our goals and we remain committed to improving your airline’s financial and operational performance.”
PAL will own one of Asia’s youngest fleet at 3.5 years with the completion of its modernization program. The retirement of its old fleet is part of a turnaround strategy aimed at transforming the flag carrier into Asia’s airline of choice.
With the upgrade, PAL expects to generate substantial annual savings from lower maintenance and fuel costs.
Ang said that PAL is now evaluating the next batch of orders after completing the order for over 70 aircraft.
He added that the next batch of orders would probably include “new generation” aircraft such as the Boeing 777-X that has a flying range of about 17 hours, and the Airbus A351 with a range of about 14 hours.
PAL has deployed its fleet of Boeing 777-300ER aircraft on the non-stop flights to the US mainland—to Los Angeles and to San Francisco—on May 3 and May 9, respectively.
PAL will gradually phase in the fuel-efficient, twin-engine B777-300ER jets, to replace the B747-400s, on the 18 weekly flights across the Pacific, offering passengers luxurious amenities inside the B777’s spacious bi-class cabin.
The venerable B747-400 served as the airline’s flagship aircraft for almost 20 years.
The airline’s long-range B777-300ERs are currently utilized on the long-haul flights to Australia, Canada and Europe (London).
The second PAL flagship offers the most spacious and comfortable cabin, with 42 seats in Business Class (made by Recaro), 328 in economy (seat width at 18.5-inch or 47 cm., the widest in the industry), and all with in-seat video, part of the cabin’s state-of-the-art inflight entertainment system.
Using only two engines (GE90-115BL, the world’s largest and most powerful commercial jet engine), compared to the B747’s four, the B777 is hailed by operators for its fuel-efficiency particularly on long flights. It can fly as far as 7,930 nautical miles (14,685 kilometers), or from Manila to the US mainland and back non-stop without refueling.
The flag carrier expects to save as much as $120 million annually in fuel and maintenance costs using the B777 on the US routes. PAL’s sixth B777 was delivered five months ago, bringing the average age of the B777 fleet to just two years.