Asia's oldest airline, Philippine Airlines, seeks investor to fund expansion

MANILA (AFP) - Struggling Philippine Airlines (PAL) said Friday it is looking for a new investor to help fund an expansion programme that would see Asia's oldest airline buying more long-haul jets.

"I would prefer an airline with more destinations so we can expand our presence," newly-installed president Jaime Bautista said.

He added that the company - founded in 1941 - may take another airline, or a company with interests in the aviation sector, as an equity partner.

Under Philippine law a foreign airline may acquire up to 40 percent of a carrier like PAL, Bautista said, while stressing there were no ongoing talks at this point.

"There are names we are looking at, but we are not at liberty to disclose (them) at this time," he told a news conference.

Bautista said the carrier plans to buy long-haul planes over 10 years - either by converting a previous order for narrow-body aircraft from Airbus into bigger planes or taking up Boeing's proposal to sell it 777 jets.

PAL is to open new local and international routes over the next three years, including Manila-New York from March 2015, he added.

After struggling with losses amid competition from budget carriers, high fuel costs and a labour dispute, PAL returned to profitability this year, posting a net profit of 1.49 billion pesos (S$43 million) in the three months to June.

Lucio Tan, one of the Philippines' richest men, named Bautista to lead the airline after regaining control of PAL in September, buying out San Miguel Corp's 49 percent interest in the airline for a reported US$1 billion (S$1.25 billion).

Bautista said PAL is reviewing a massive refleeting programme initiated by the previous management, which had ordered 64 planes from Airbus for more than US$7 billion after San Miguel won management control of the airline in 2012.

The airline's listed parent PAL Holdings disclosed last month it was "seriously studying" the possibility of deferring aircraft deliveries, complaining that "too many orders" had been made.

PAL will take delivery of 10 Airbus A321s this year and another 10 of the same model in 2016, Bautista said Friday.

Some of the 28 Airbus planes set for delivery after 2016 may be converted to long-haul jets, he said, without giving further details.

"We'll have to study this very carefully. It's easy to buy airplanes but difficult to dispose," he added.

"We will take advantage of the refleeting programme to improve our service, reboot costs and hopefully, become a profitable airline."

PAL will now focus its European operations on its newly-opened London route and add more flights to Honolulu, while scaling down Middle East operations due to lower-than-projected demand, he said.

Its new fuel-efficient Airbus jets will allow PAL to compete better when Southeast Asian nations ease air traffic restrictions next year, he added.

The company will also be "more aggressive" domestically and may reopen its hub in Cebu, the commercial capital of the central Philippines, said Bautista.