Troubled PAL to Drastically Cut Fleet Size

Sun Star Daily
Monday, August 31, 1998

MANILA troubled flag carrier Philippine Airlines. (PAL) said yesterday it would drastically cut its fleet size to survive a “financial tailspin" that has pushed it to the brink of bankruptcy.

The carrier will by November this year begin deploying a "leaner, younger fleet" on domestic and international routes, a PAL statement said.

"The cost-efficiency afforded by the leaner, more modern fleet, combined with the airline’s reduced exposure to unprofitable domestic operations, should allow PAL to cope the difficulties brought on by the new economic realities prevailing in the region," the statement said.

PAL is next month to submit a rehabilitation plan including the fleet restructuring to the Securities and Exchange Commission (SEC).

The plan calls for a fleet of "initially between 21 and 25 aircraft" compared to 54. PAL said it would also retire its Fokker 50 turboprop aircraft used mainly in domestic operations.

A crippling pilots' and ground staff strike had earlier forced PAL to considerably reduce its operations and seek SEC protection from its creditors.

PAL sacked about 5,000 ground crew and 600 pilots after the pilots' strike in June although it later hired new pilots and took back some of the strikers.

PAL, which used to fly to 16 international destinations before announcing the cutback in June, now flies to San Francisco, Los Angeles, Hong Kong, Tokyo, Fukuoka, Singapore and Taipei. Last week it said it would mount 10 new international flights in October.

PAL either said it was filling about 76 percent of its seats on domestic flights and 73 percent on international flights.

PAL’s net loss in the three months to June surged nearly 10 times from a year earlier to P4.9 billion ($111.36 million). It lost P1.9 billion in June alone following the pilots’ strike. AFP