October 8, 2014 / 5:08 AM / 5 years ago

Philippine Airlines says considering delaying delivery of Airbus orders

MANILA (Reuters) - Philippine Airlines (PAL) is considering delaying delivery of Airbus (AIR.PA) planes it has on order as it reviews operations after billionaire tycoon Lucio Tan resumed management control of the carrier last month, a senior official said.

Philippine Airlines (PAL) planes are seen parked on tarmac in Manila International Airport in Pasay city, metro Manila September 9, 2014. REUTERS/Romeo Ranoco

The airline is currently scheduled to take delivery of its 30th Airbus jet in November under a $7 billion (£4.36 billion) deal to buy 44 new A320 and 20 new A330 aircraft signed in 2012, including firm orders and options for more purchases.

It is scheduled to take 10 more aircraft in 2015 and another 10 in 2016. In August, the airline decided not to exercise an option to purchase eight Airbus A321 NEOs.

“We have to discuss with Airbus,” PAL general manager Jaime Bautista told reporters at an event in Manila late on Tuesday. “It can be deferred, but of course that entails cost if you defer delivery.”

Asia’s first airline has decided to indefinitely defer the planned opening of new routes in Europe, instead focusing on profitable routes in North America amid a shortage of aircraft for long-haul flights in its fleet, Bautista said.

The airline would review its current routes as it had a surplus of short- and medium-haul aircraft.

“We really have to check whether the market requires all these airplanes,” Bautista said.

PAL is working on a plan to return to profitability after two consecutive years in the red, with a view to potentially attracting a “strategic partner”, Bautista said.

“It’s more challenging now because this is an airline with more airplanes and there is more competition,” he said.

The review comes after the Tan group last month bought out its partner in PAL, diversified conglomerate San Miguel Corp (SMC.PS), in a $1.3 billion deal.

PAL currently has codeshare agreements with carriers like Emirates Airline EMIRA.UL, Etihad Airways, All Nippon Airways and Cathay Pacific (0293.HK).

Shares in PAL Holdings had slipped 0.5 percent, in step with the broader market index's .PSI 0.5 percent decline as of 0634 BST.

Reporting by Neil Jerome Morales; Editing by Stephen Coates

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