PAL to increase some long-haul flights for slow bleeding

The Philippine Airlines

MANILA, Philippines – Philippine Airlines (PAL) will halt money-losing “ultra-long haul routes” as it prepares for a major restructuring program considered crucial to its bid to survive the ongoing pandemic and aviation.

PAL did not provide details in the latest financial information and its officials did not immediately respond to inquiries about which routes would be affected.

An aviation expert and former Philippine Airlines president Avelino Zapanta said these could include the flag carrier’s flights from Manila to London and New York.

“London is very likely. It is a very expensive route to drive and the only Euro-destination PAL, ”Zapanta told the Inquirer.

He said PAL may also decide to discontinue service to New York while retaining other North American routes with less frequent flights.

PAL pursued an aggressive international strategy prior to the COVID-19 outbreak to capture higher yields, expand connectivity to and from the Philippines, and improve its global profile. This helped PAL win a four-star rating from SkyTrax in 2018. International operations contributed about 80 percent of PAL revenue from 2018 to 2020, while the domestic service accounted for 20 percent, parent company PAL Holdings Inc. said. in its annual report for 2020.

The largest contributors last year were transpacific (US and Canada) at 36.6 percent; Asia and Australia, 29.6 percent; Middle East, 13.3 percent and Europe, 2.4 percent.

PAL Holdings said the turnaround effort also included restructuring its fleet “to reduce capacity and match the expected reduced market demand in the short term.

“PAL wants a long way back to recovery. Uncertainty about the situation is still prevalent, but news of the availability of COVID-19 vaccine gives hope that passenger traffic will be better than 2020, ”it said.

Recovery in local operations

Competitors such as Cebu Pacific are seeing faster recovery in domestic operations given international travel restrictions and a government ceiling on overseas arrivals to Manila Ninoy Aquino International Airport (Naia). Candice Iyog, vice president of marketing and customer experience at Cebu Pacific, told reporters. in a briefing, they hoped the government would ease the daily limit of 2,000 passengers arriving in Naia. “Our priority is to ensure that we can get on the domestic front,” Iyog said.

PAL Holdings, owned by billionaire Lucio Tan with Japan’s ANA Holdings as a minority shareholder, saw losses in 2020 of almost 600 percent to P71.8 billion, while revenue, mainly from passenger operations, fell 64 percent.

Airlines around the world have been shaken by huge financial losses due to the pandemic.

Trading in PAL Holding’s shares has been suspended by the Philippine Stock Exchange as of June 17, after the independent auditor, SyCip Gorres Velayo & Co., issued a disclaimer and refused to issue an opinion on the airline’s financial statements due to lack of information.

Also, trading in shares of Indonesia’s flag bearer, Garuda, was also suspended on Friday after it defaulted on debt.

PAL plans to file a Chapter 11 petition on the protection of creditors in the United States to remove its assets and restructure hundreds of billions of pesos into liabilities.

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