February 17, 2016 / 7:44 AM / 4 years ago

Philippine Air signs multi billion dollar Airbus deal

SINGAPORE (Reuters) - Philippine Airlines (PAL) ordered 6 wide body Airbus (AIR.PA) jets worth about $1.8 billion at list prices as it seeks to fly non-stop flights to U.S. destinations, helping it expand its lucrative international network.PAL will start taking delivery of the Airbus A350-900 jets in two years, Jamie Bautista, PAL’s president, and Fabrice Bregier, Airbus president, told a news conference at the Singapore Airshow on Wednesday.

Airbus President and Chief Executive Officer (CEO) Fabrice Bregier (2nd R) poses with Philippines Airlines Chairman Lucio Tan (2nd L) after a signing ceremony at the Singapore Airshow at Changi Exhibition Center February 17, 2016. REUTERS/Edgar Su

The country’s No. 2 airline is taking in more aircraft to cater to increased demand from millions of Filipinos working overseas, just as rival Cebu Pacific expands its local routes.

“The market is growing, the economy in the Philippines is improving, so that will allow more Filipinos to afford travel,” said Bautista.

PAL ordered six of the Airbus jets, with another six purchase options, Bautista said. Airlines typically receive discounts to list prices.

PAL officials said they would consider financing the planes through sale and leaseback options and commercial debt.

The A350s will not only allow PAL to fly non-stop to U.S. cities, but may also opens the door for direct routes to Europe.

“With these airplanes, we can increase our presence - more flights to Los Angeles, San Francisco, more fights to Vancouver,” said Bautista.

PAL’s fleet acquisition underscores the buoyant outlook for the Philippines economy as it bucks a global slowdown. However, there are concerns that global demand for new jetliners is slowing after a record wave of orders.

Brendan Sobie, analyst at consultancy CAPA said PAL’s expansion was a smart move as the carrier doesn’t face a lot of competition on U.S. routes. 

PAL is rebuilding its fleet cautiously, unlike other larger airlines in Southeast Asia, which had placed orders for hundreds of aircraft in recent years, he said.

The Philippine aviation industry received a boost in 2014 after the U.S. Federal Aviation Administration upgraded the country’s civil aviation status to let its airlines operate new direct flights to the U.S.

Reporting by Anshuman Daga and Rujun Shen, Editing by Tim Hepher

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