With COVID-19 cases mounting and no end in sight to the crisis, the bumpy ride for bilyonaryo Lucio Tan’s Philippine Airlines continues.
Global aviation consultancy firm Centre for Asia Pacific Aviation (CAPA) believes the pandemic will continue to clip the wings of PAL, battered with heavy losses and debt.
“Gaining agreement from its creditors and presumably a smooth passage through bankruptcy court will be major steps for PAL. But it is far from out of the woods yet, and it still has some tough months ahead of it before any meaningful recovery takes hold,” CAPA said.
PAL recently won approval from the US Bankruptcy Court in New York to access the first $20 million from a $505-million loan facility to keep its operations going.
To ensure its survival during the pandemic, the flag carrier plans to scale down its widebody fleet and long haul network.
“PAL will axe its three longest routes to London, New York and Toronto, which were served by the A350s before the pandemic,” CAPA said.
To be retained are routes to destinations on the West Coast of North America – Los Angeles, San Francisco and Vancouver.
CAPA said the changes align with the industry’s accepted premise that short haul markets will recover fastest following the pandemic and long haul will be slowest to recover.
“But there is no question that a streamlined PAL will be better placed to respond to what could be a protracted recovery in international markets. It will also have options to expand its widebody fleet again and perhaps resume some of its cancelled routes when demand does eventually come back,” CAPA said.