San Diego Lights Up A350 Planning

Seattle and San Diego in the Works

20 December 2017

Flag carrier Philippine Airlines (PAL) is adding new nonstop destinations to and from United States over the next two years as it receives four Airbus A350-900s beginning second half of 2018.

PAL president Jaime Bautista said nonstop flight between Manila and New York will commence on the third quarter of 2018 followed by two other nonstop destinations by the fourth quarter.

The airline recently re-introduced nonstop flight between Manila and Toronto in December 16 after it accepted delivery of its ninth and tenth Boeing 777-300ER aircraft, all bound for trans-Pacific and London network.

“The Boeing will be used for our long-haul operations, a measure aimed primarily at improving the passenger travel experience and delivery on board,” says Bautista.

Bautista added that while "Boeing 777 is our flagship for long-haul flights, its range and operational capacity is not enough to service the eastern seaboard of North America. That would be possible only using the A350-900s.”

“From June, Airbus will begin A350-900s deliveries then we will receive one each in August, September and December,” Bautista said.

The airline is restricted to carry only about 300 passengers out of the 370 the triple seven can carry on its 14-15 hour 7500nm journey to Toronto and back to Manila due to range issues. 

Bautista also expressed that they can fly the Boeing nonstop between Manila and New York but with more payload hit as the latter is farther than Toronto (about 150nm more). Presently, PAL flies to New York with stops in Vancouver for a total journey time of 18-19 hours using the B777.

“These routes can be served well by the A350s reducing flight time by 3-4 hours just like what we've done in Toronto.” Bautista said.

“The arrival of the A350 aircraft will allow us to fly non-stop Manila-New York at full capacity. We should be able to carry the required number of passengers without doing a tech stop, particularly returning to Manila, which is against the wind,” Bautista added.

According to Bautista the rest of the A350 routes would also be in North America as they will soon be deployed to new destinations either in Seattle or San Diego around fourth quarter of next year aside from rotations to San Francisco.

PAL reiterates that its target market in the United States and Canada has always been the overseas Filipinos majority of whom can be found in the greater Los Angeles metropolitan area that had the largest number of Filipino immigrants (787,422, or 46.7 percent of the Filipino-born population) in 2008, followed by Hawaii (99,659, or 5.9 percent), New Jersey (89,098, or 5.3 percent), New York (83,194, or 4.9 percent), Illinois (77,505, or 4.6 percent), and Texas (70,819, or 4.2 percent). US Census 2009. In 2016, the Greater Toronto Area host 337,760, Greater Calgary Area 175,130, and British Columbia 158,215 Filipinos. Calgary, Chicago, and Houston remains to have no direct flights to the Philippines as of 2017. 

Vancouver rights will likewise be extended to Chicago starting next year with B77w aircraft after de-coupling Toronto and New York, while Houston or Miami is planned to be added in 2019 as the airline receives two more frames of the A359.

The Philippines is only allowed 9 gateway points to the United States under the amended Air Services Agreement of 1995.

PAL currently flies 5 of them namely, Guam, Honolulu, San Francisco, Los Angeles, and New York. Chicago and Seattle are planned to be the 6th and 7th gateways while the 8th and 9th is tossed between Houston and Miami.

Should Seattle be preferred in the listing, San Diego will be linked via Honolulu under the same amended bilateral with B777 service. Hawaii is currently being served with A330-300 as an end point.

Meanwhile, the Securities and Exchange Commission (SEC) has approved the airline's equity restructuring to improve its financial position as it lures foreign investor to the company.

PAL would use its additional paid-in capital of ₱13.64 billion to fully wipe off its deficit of ₱13.57 billion as of Dec. 31 last year and allow the airline to declare dividends and attract investors.

Earlier, PAL also secured SEC approval to reduce its authorized capital stock from ₱20 billion to ₱13 billion via a decrease in par value per share from ₱0.20 to ₱0.13 in preparation for the entry of new investors.

Bautista confirmed that PAL “is still in discussion” with possible interested parties.

Among the items under discussion with the foreign airline is the valuation and the investment vehicle or the corporate entity for the foreign investment. PAL Holdings is listed with a market capitalization of roughly 133.62 billion pesos ($2.7 billion) in 2016.

“It’s not easy to find foreign investors at this time, but we are talking to one group who have really given a sign of good interest. They also have investments in other airlines,” the airline President said without disclosing the company.

PAL may have to wait until next year before it closes a deal with a foreign strategic investor, depending on the operating environment and market conditions.

“Hopefully, we will get profitable again this year,” Bautista said, saying it may not be practical to take in a strategic partner if the operating environment is not good.

PAL reported a comprehensive net loss of ₱3,546 billion ($68.6 million) in January to September this year, mainly attributed to fuel hedge and foreign exchange losses. Last year, it earned ₱2,961 billion ($68.6 million) comprehensive net income reported in the same period last year.

Philippine Airlines is hoping to strike a deal with a foreign investor by next year to help the carrier finance wide-body fleet expansion, upgrade services and expand its network globally, particularly on serving two more destinations in Europe.

The airline has order options for four Airbus A330s and six A350s for 2021 delivery.

In 2018 the airline will also receive six A321Neos out 21 A321Neo orders up to 2024, and six Q400NG turboprops.