Air Transport World

Split personality: its owners are at war and its future is uncertain. But Philippine Airlines soldiers on.(includes an article about Grand International Airways and an article about Filipino aviation infrastructure)(Company Profile)

Its owners are at war and its future is uncertain. But Philippine Airlines soldiers on

MANILA--Philippine Airlines is aiming to be the world's best. And while this goal is not unlike that of any other airline, what makes PAL different is that it admits that it has big problems that will make achieving the goal much more difficult. Such problems, however, do not prevent President and COO Jose Antonio Garcia from saying that once PAL has what he calls "a clean house," it will "take on the world." He admits that this is "10 years from now. I'll make a commitment we'll do it."

The most obvious evidence of PAL's problems is in its financial performance. It lost 1.7 billion pesos ($61 million) in the fiscal year ended March 31, compared with 451 million pesos in the previous year. Revenues of 26.6 billion pesos were flat compared with the prior year's results, while operating expenses rose 1.3% and operating loss worsened to 838 million pesos from 311 million. Long-term debt and capital-lease obligations total more than 10.6 billion pesos, against 7 billion pesos in equity.

The financial difficulties stem from a number of problems but three basic strands can be determined: The country's poor aviation infrastructure, newentrant airlines (see box, page 72) and the huge, sprawling subject of PAL's relationship with the government and role in development of the economy.

Even if one ignores the uncertainty created by the dispute over the future airport needs of Manila, the poor facilities at existing airports are an enormous problem that confronts PAL every day. Few airports outside the capital can even land an aircraft safely after dark, a situation that has a devastating impact on the ability of the airline to maximize its assets. Indeed, Garcia refers to PAL as being "daylight limited," and tacitly admits that this is one of the factors that forced PAL into a study about how to reroute and re-equip.

Although the study was kept under wraps, with no result expected till the second quarter of this year, at the end of December, the airline surprised observers with an order for 24 Airbus A340-300s, eight A330-300s and 12 A320s, with deliveries beginning in the second quarter of 1997. It already has four A340:200s on order. The A320s are expected to replace 12 Boeing 747-300s. But unless the A340s and A330s likewise replace existing types, PAL'S fleet will be even more diverse, an ironic outcome, given the airline's goal of simplifying the mix.

As to the present fleet, even among the same aircraft type are glaring examples of inefficiency. For instance, the carrier operates 11 Boeing 747200s, six of which are GE-powered, the other five by Pratt & Whitney. …

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