Balita.org: Your Premier Source for Comprehensive Philippines News and Insights! We bring you the latest news, stories, and updates on a wide range of topics, including politics, culture, economy, and more. Stay tuned to know everything you wish about your favorite stars 24/7.

Contacts

  • Owner: SNOWLAND s.r.o.
  • Registration certificate 06691200
  • 16200, Na okraji 381/41, Veleslavín, 162 00 Praha 6
  • Czech Republic

PAL spending P75 billion this year to support growth

Following great annual earnings reports by both Philippine Airlines [PAL 5.70, up 2.1%; 137% avgVol] and Cebu Pacific [CEB 31.65 unch; 388% avgVol], both domestic airlines have pledged to spend a great deal of money to expand networks, buy new planes, and service existing planes. CEB [link] said that it will spend around P50 billion in what it called “mostly aircraft-related capex” which will include the purchase of 16 new planes, to be funded through internally generated funds. CEB expects to grow its capacity by 5% to 8% this year. PAL [link] said that it will spend approximately P25 billion for aircraft and other capex needs, with 80% of that amount going to the refurbishment of its existing A321ceo planes. PAL said that it doesn’t expect to receive any new planes until 2025 (A350-1000s) and 2026 (Airbus 321-231 neos).


MB bottom-line: When it rains it pours, and both PAL and CEB are looking to catch as much of that falling rain as possible. In the old days, catching that rain would be as easy as just buying more planes – whether direct from the manufacturer or from the corpses of failed legacy carriers around the world. Now, though, planes are hard to come by. It’s raining everywhere, and everyone wants to catch the rain. The high tide is floating all the boats, hiding all the problems. For now. The next 18-24 months will be a battle of operational excellence that will be won through the efficient use of existing resources, not through the bombastic deployment of financial reserves. In the boom/bust world of airlines, we are squarely in the “boom” phase. For how long? Who knows. 

---

Merkado Barkada is a free daily newsletter on the PSE, investing and business in the Philippines. You can subscribe to the newsletter or follow on Twitter to receive the full daily updates.

Read more on philstar.com