Philippine Airlines sets up budget unit
MANILA (AFP) — Philippine Airlines said Tuesday it has set up a low-cost unit, PAL Express to do battle with rival budget carriers and boost the national flag carrier's profits.
PAL Express is to fly to Philippine islands with small airports from May 5 with a fleet of turbo-propeller aircraft, said Jaime Bautista, president of parent firm PAL.
The budget unit is expected to carry around a million passengers each year.
"At full operation, we project that profits will increase by around 300 million pesos (7.2 million dollars) while revenue should be about one billion pesos," Bautista told a news conference.
PAL Express will acquire the turbo-prop operation of a PAL affiliate, Air Philippines.
Last week, PAL announced the purchase of three Q300 and six Q400 aircraft manufactured by Bombardier Aerospace of Canada, valued at 150 million US dollars based on list prices.
Two Q300s have already arrived and three more will be arriving in the first week of May while one Q400 is due a week after that, Bautista said.
"PAL Express is a separate unit of PAL that will not directly compete with Air Philippines because PAL Express will be mostly present in areas where Air Philippines is not," Bautista said.
PAL booked revenue of 1.4 billion pesos in the year to March, up 17 percent from its previous fiscal year, Bautista said.
He said net profit dropped due to higher fuel costs but did not provide figures.
PAL is 85 percent-owned by listed company PAL Holdings Inc which is majority owned by tycoon Lucio Tan, who is listed by Forbes Magazine as the wealthiest man in the Philippines with a net worth of 1.5 billion dollars in 2007.
