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  • Lucio Tans Sky-High Ambitions: Philippine Airlines to Boost Fleet with 20 Boeing Dreamliners

    Lucio Tans Sky-High Ambitions: Philippine Airlines to Boost Fleet with 20 Boeing Dreamliners

    Philippine Airlines, under the leadership of banking and tobacco magnate Lucio Tan, intends to acquire up to 20 Boeing 787-10 Dreamliner jets as the company upgrades its fleet in response to increased demand in air travel. The national airline has committed to purchasing at least 15 Dreamliners, with the option to buy another five, as stipulated in a preliminary agreement established in the United Kingdom.

    A Historic Purchase for Philippine Airlines

    The new order represents Philippine Airlines’ initial acquisition of Boeing aircraft in nearly 20 years, with delivery slated between 2031 and 2034. While the financial details of the agreement were not disclosed, the overall deal could potentially exceed $7.1 billion based on listed prices. A single Dreamliner typically ranges from $150 million to $200 million, even though its list price can reach a peak of $355 million.

    The procurement follows Philippine Airlines’ successful fundraising of $300 million from its inaugural bond sale after emerging from Chapter 11 bankruptcy in the U.S. in December 2021. The generated funding will contribute to the rejuvenation and expansion of the 85-year-old airline’s fleet.

    Lucio Tan III, president of PAL Holdings, the airline’s parent company, said, “This investment exemplifies our faith in the future of Philippine Airlines and the projected growth of air travel.” He added, “The Boeing 787-10 will augment our medium and longhaul fleet, enabling us to offer an enhanced travel experience for our passengers while improving operational efficiency.”

    A Broader Strategy for Efficiency and Sustainability

    The acquisition of the 787 Dreamliners is part of a larger plan to build a more efficient, sustainable, and competitive airline. The new aircraft will be powered by GE Aerospace’s GEnx-1B engines. Philippine Airlines, which boasts a fleet of over 80 aircraft, provides service to various destinations across the Philippines and 40 international routes in Asia, North America, Australia, and the Middle East.

    Since 2024, the airline has been actively expanding and upgrading its fleet, following a record profit in 2023 spurred by a post-pandemic travel surge. In December, the airline also added five Airbus A320 aircraft to its fleet.

    In addition to aviation, Tan’s business portfolio extends to banking, beer, spirits, tobacco, and real estate through his publicly traded LT Group. His net worth is estimated to be $2.9 billion.

    This purchase also represents a significant win for Boeing, which has also recently secured orders for 100 aircraft from leasing company SMBC and 28 jets from Riyadh Air.

    Questions & Answers

    What is the significance of this purchase by Philippine Airlines?
    This is the first time in nearly two decades that Philippine Airlines has placed an order for Boeing aircraft, marking a significant milestone in the company’s fleet upgrade strategy.

    How will this acquisition benefit Philippine Airlines?
    The acquisition of the Boeing 787-10 Dreamliner aircraft is expected to enhance operational efficiency and the overall travel experience for passengers, particularly for medium and long-haul flights.

    What are Lucio Tan’s other business interests besides aviation?
    Apart from aviation, Lucio Tan’s business interests span across various sectors, including banking, beer, spirits, tobacco, and real estate through his publicly listed LT Group.

  • Philippine Airlines Soars with $300M Bond Sale: Billionaire Lucio Tans Strategy for Expansion and Recovery Post-Bankruptcy

    Philippine Airlines Soars with $300M Bond Sale: Billionaire Lucio Tans Strategy for Expansion and Recovery Post-Bankruptcy

    Philippine Airlines, under the ownership of billionaire Lucio Tan, renowned for his ventures in the tobacco and banking sectors, has successfully garnered US$300 million via a five-year bond sale. This strategic move is aimed at financing the carrier’s ambitious plans for fleet modernization and growth.

    The bonds, which have been guaranteed as senior unsecured, were issued at a rate of 7.75% by Primero Agila, a fully owned subsidiary of the airline. The statement issued by the carrier also revealed the overwhelming response received for the offering, which was subscribed to 4.5 times more than anticipated, resulting in an order book surpassing $1.4 billion.

    First Bond Sale Since Bankruptcy Clearance

    Significantly, this bond sale is the first for Philippine Airlines following its emergence from Chapter 11 bankruptcy proceedings in the U.S. in December 2021. The funds raised will be used to bolster the carrier’s international expansion plans, which include augmenting the frequency of flights to major North American hotspots including Chicago, New York, Toronto, and Vancouver.

    In the words of Lucio C. Tan III, president of PAL Holdings and the grandson of the tycoon, “This landmark bond offering is a powerful affirmation of Philippine Airlines’ transformation and the confidence that global investors have in our long-term vision and growth ambitions. This allows us to strengthen our network and continue to elevate the travel experience for our customers.”

    A Landmark Achievement

    The bonds, which have received an unconditional and irrevocable guarantee by Philippine Airlines and its wholly-owned subsidiary, Air Philippines Corp., will be listed on the Singapore Exchange. The $300 million bond sale has been recognized as the first rated high-yield bond offering by a Philippine issuer in over a decade and the first unsecured rated high-yield bond issued by an Asian airline.

    Moreover, the airline has demonstrated a robust earnings recovery since the height of the Covid-19 pandemic. Its net profit witnessed a rise of 2.6% to $78.6 million in the first quarter, compared to the same period in the previous year, while revenue experienced a healthy increase of 9.7% to $895.7 million.

    In addition to aviation, Tan maintains interests in multiple sectors including banking, beer, spirits, tobacco, and real estate via his publicly listed flagship company, LT Group. His net worth stands at an impressive $3 billion, making him one of the wealthiest tycoons in the Philippines.

    Questions & Answers

    What will the proceeds from the bond sale be used for?
    The funds raised from the bond sale will be used to support Philippine Airlines’ international expansion plans, including the increase of flight frequencies to major North American cities.

    Why is this bond sale significant for Philippine Airlines and the aviation industry?
    This bond sale is the first for Philippine Airlines since it emerged from bankruptcy proceedings last year. It is also the first rated high-yield bond offering by a Philippine issuer in over a decade and the first unsecured rated high-yield bond issued by an Asian airline.

    How has Philippine Airlines performed financially since the height of the Covid-19 pandemic?
    The airline has shown a strong earnings recovery, with net profit rising 2.6% to $78.6 million in the first quarter from a year earlier, while revenue increased 9.7% to $895.7 million.