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Business News/ News / Philippine Air Sets $450 Million of Spending as Tourism Rebounds
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Philippine Air Sets $450 Million of Spending as Tourism Rebounds

Philippine Airlines Inc. has set a spending budget of $450 million for this year, more than double the $170 million allotted in 2023, as it gears up for the continued recovery in tourism as well as tighter competition.

Philippine Air Sets $450 Million of Spending as Tourism ReboundsPremium
Philippine Air Sets $450 Million of Spending as Tourism Rebounds

(Bloomberg) -- Philippine Airlines Inc. has set a spending budget of $450 million for this year, more than double the $170 million allotted in 2023, as it gears up for the continued recovery in tourism as well as tighter competition.

The flag carrier, which is majority owned by billionaire Lucio Tan, is looking to continue to refurbish existing planes as well as to expand capacity by about 10% to 12% this year. At the same time, “we also anticipate pressure from more operators coming into the market with increased capacities," Chief Financial Officer Anna Isabel Bengzon told reporters in a briefing in Manila on Tuesday.

It plans to finance its capital spending this year through internally generated cash, bank loans and lease financing, according to Bengzon.

In a sign of ongoing recovery in the tourism sector, the Philippines attracted 5.45 million foreign tourists last year, surpassing its target of 4.8 million travelers. The Southeast Asian nation is now expecting to bring in 7.7 million international visitors this year.

The rebound in air travel was reflected in Philippine Air’s brisk business last year when it carried nearly 15 million passengers compared with 9.3 million in 2022.

The carrier returned to profitability in 2021 following a restructuring that allowed it to cut debt by $2 billion and secure $505 million in equity.

The company is also exploring possibilities to place orders for three additional Airbus A350-1000 wide-body jets and for its return to Europe, said President and Chief Operating Officer Stanley Ng. 

“We’re a little bit more optimistic right now," he said in the same briefing. “Most likely we’ll have to make a decision by the end of the year, and looking at the market condition today, it looks like there’s an opportunity to get additional new aircraft."

Philippine Air currently operates a fleet of 78 aircraft. It is adding 22 new planes, with the delivery of nine A350-1000 and thirteen A321neo expected from the fourth quarter of 2025 through 2029.

As competition heats up and following last year’s record earnings, the airline anticipates revenue growth to slow to high single-digit levels this year, said Bengzon.

More stories like this are available on bloomberg.com

©2024 Bloomberg L.P.

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Published: 03 Apr 2024, 06:42 AM IST
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