Philippine Airlines

Philippine Airlines, Inc. (abbreviated PAL), also known historically as Philippine Air Lines, is the national airline of the Philippines. It is the first commercial airline in Asia and the oldest of those currently in operation, with a long and distinguished history spanning over sixty years. Out of its hubs at Ninoy Aquino International Airport in Manila and Mactan-Cebu International Airport in Cebu City, Philippine Airlines serves eighteen destinations in the Philippines and twenty-six destinations in Southeast Asia, East Asia, Australia, Canada and the United States.
Formerly one of the largest Asian airlines, PAL was severely affected by the 1997 Asian Financial Crisis. In what was believed to be one of the Philippines' biggest corporate failures, PAL was forced to downsize its international operations by completely cutting operations to Europe and eventually Southwest Asia, cutting virtually all domestic services excluding routes operated from Manila, reducing the size of its fleet and terminating the jobs of thousands of employees. The airline was placed under receivership in 1998, gradually restoring operations to many of the destinations it formerly serviced. PAL exited receivership in 2007 with ambitious plans to further restore services to its previously-serviced destinations, as well as diversify its fleet.
Philippine Airlines is the first and only airline in the Philippines to be accredited with the IOSA (IATA Operations Safety Audit) by the International Air Transport Association and has been awarded a 3-star rating by Skytrax.

Early beginnings
Philippine Airlines was founded on February 26, 1941, making it Asia's oldest carrier still operating under its current name. The airline was started by a group of businessmen led by Andres Soriano, hailed as one of the Philippines' leading industrialists at the time, who served as its general manager, and former Senator Ramon Fernandez, who served as its chairman and president.
The airline’s first flight took place on March 15, 1941 with a single Beechcraft Model 18 NPC-54 on daily services between Manila (from Nielson Field) and Baguio. On July 22, the airline acquired the franchise of the Philippine Aerial Taxi Company. Government investment in September paved the way for its nationalization.
PAL services were interrupted during World War II, which lasted in the Philippines from 1942 to 1945. Upon the outbreak of the Pacific War on December 8, 1941, the two Model 18s and their pilots were pressed into military service. They were used to evacuate American fighter pilots to Australia until one was shot down over Mindanao and the other was destroyed on the ground in an air raid in Surabaya, Indonesia.
On February 14, 1946, PAL resumed operations after a five-year hiatus with service to 15 domestic points with five Douglas DC-3s and a payroll of 108 names. Philippine Airlines returned to its original home, the Nielsen Airport in Makati. The airport, heavily damaged during the war, was refurbished and modernized by PAL at a hefty cost of over one million pesos, quickly becoming the official port of entry for air passengers into the Philippines. The airport was operated by Manila International Air Terminal, Inc., a wholly-owned PAL subsidiary.
On July 31, 1946, PAL became the first Asian airline to cross the Pacific Ocean when a chartered Douglas DC-4 ferried 40 American servicemen to Oakland, California from Nielson Airport with stops in Guam, Wake Island, Johnston Atoll and Honolulu. A regular service between Manila and San Francisco was started in December the same year. It was during this time that the airline was designated as the country’s flag carrier.
PAL commenced service to Europe in 1947 with the acquisition of more Douglas DC-4s. By 1948 PAL had absorbed the only other scheduled airlines in the Philippines, Far Eastern Air Transport and Commercial Air Lines. Following the government's decision to convert Nichols Field in Pasay City, the site of a former U.S. Air Force base, into a new international airport for Manila, PAL was required to move its base of operations and passenger terminal there from Nielsen Airport. The transfer was accomplished over a five-month period from January 31 to June 28, 1948, with PAL investing an additional P600,000 in ground installations and improvements to Nichols Field.
In 1951, PAL leased a DC-3 named "Kinsei" to Japan Airlines, which led to the founding of the country's own national airline. In 1954, the Philippine government suspended all long-haul international flights, only to resume five years later, when the government decided that it was a matter of national policy. In three years, PAL started services to Hong Kong, Bangkok, and Taipei using Convair 340s that would later be replaced by the Vickers Viscount 784, which brought the airline into the turboprop age.

First expansion and modernization
In the 1960s, PAL entered the jet age, initially with a lone Boeing 707 that was later replaced with Douglas DC-8 aircraft leased from KLM Royal Dutch Airlines. The aircraft were used for long-haul international flights to Europe and the United States. The DC-3 remained the mainstay of domestic services as it expanded to a total of 72 points as airports were improved or opened, but most of the airline's rural air service was later stopped in May 1964. Two years later, PAL commenced its first turbojet services to Cebu, Bacolod, and Davao using the BAC1-11. In addition, PAL was also privatized, as the Philippine government relinquished its share in PAL after Benigno Toda, Jr., then-PAL chairman, acquired a majority stake in the airline.
When President Ferdinand Marcos declared martial law in 1972, he implemented a one-airline policy. PAL was the lone surviving airline, absorbing Air Manila and Filipinas Orient Airways. On March 10, 1973 PAL was re-designated as the national flag carrier. PAL continued its expansion with the arrival of its first Douglas DC-10 in July 1974. Three years later, the Philippine government re-nationalized PAL, with the Government Service Insurance System holding a majority of PAL shares. In 1979, the Boeing 727, the Boeing 747-200 and the Airbus A300B4, dubbed the "Love Bus", joined the PAL fleet, while the PAL DC-8 fleet was retired.
Between 1979 and 1981, as part of a comprehensive modernization program led by then-President Roman A. Cruz, PAL built a series of mammoth aviation-related facilities around the periphery of the MIA. These included the PAL Technical Center, the PAL Inflight Center, the PAL Data Center and the PAL Aviation School.
On April 2, 1982, a PAL Boeing 747 arriving from San Francisco via Honolulu became the first aircraft to dock at the new 800-million peso Terminal 1 of Manila International Airport. PAL would later strengthen its cargo-handling capability by building a dedicated cargo terminal building adjacent to the MIA passenger terminal and installing cargo-refrigeration equipment in 1983. The new facilities, which catered mainly to international cargo services, enabled PAL to become a fully equipped cargo handler. Services to Paris and Zürich began in November 1982.
Following the 1986 EDSA Revolution, Dante G. Santos became PAL president. He launched a massive modernization of the domestic fleet with the acquisition of the Short 360, nicknamed the "Sunriser", in May 1987, the Fokker 50 in August 1988 and the Boeing 737-300 jet in August 1989.
As the Manila domestic passenger terminal outgrew its capacity and ramp aircraft parking space became more scarce, PAL leased the hangar of the Philippine Aerospace Development Corporation and converted it into the PAL Domestic Terminal 2. The terminal, which opened in October 1988, exclusively served passengers flying to destinations serviced by PAL's Airbus A300s: namely, Cebu and Davao, with General Santos and Puerto Princesa added later on. At the same time, PAL also expanded and improved the existing terminal. The opening of the new facility cleared out the old terminal and provided greater convenience to passengers.

Re-privatization and second expansion
PAL was privatized again in January 1992, when the government sold a 67% share of PAL to a holding company called PR Holdings. However, a conflict as to who would lead PAL led to a compromise in 1993, when former Agriculture Secretary Carlos G. Dominguez was elected PAL president by the airline's board of directors. The fleet of BAC1-11s were retired in May 1992, following completion of the deliveries of Boeing 737s, and the Short 360s in September. In November 1993, PAL acquired its first Boeing 747-400. The new aircraft arrived at Subic Bay International Airport and was carrying then-President Fidel V. Ramos, who was headed home from the United States after an official visit. The 200-ton aircraft, one of the world's largest and most popular long-range aircraft continues to be the mainstay of PAL's trans-Pacific services and its flagship aircraft. A new service between Manila and Osaka, launched in 1994, brought to 34 the number of points in PAL's international route network.
The PAL Domestic Terminal 2 was refurbished in 1995, with a number of facilities being added or improved, including a renovated Mabuhay Lounge, an exclusive check-in counter for Mabuhay Class passengers, an Express Counter, refreshment bar, a medical clinic, an expansive waiting lounge and two baggage carousels in the arrival section. PAL facilities at NAIA were also renovated. The total cost for the renovation of the domestic terminal (1 and 2) reached P33.15 million while the NAIA renovation totaled P125 million.
In January 1995, Lucio C. Tan, the majority shareholder of PR Holdings, became the new chairman and CEO of the airline. The delivery of the carrier's fourth Boeing 747-400 in April 1996 signaled the start of an ambitious US$4 billion modernization and refleeting program that aimed to make PAL one of Asia's best airlines within three years. The centerpiece of the program was the acquisition of 36 state-of-the-art aircraft from Airbus and Boeing between 1996 to 1999. The refleeting sought to give PAL the distinction of having the youngest fleet in Asia and allow the expansion of its domestic and international route network. The 36 orders of PAL during its refleeting program were for eight Boeing 747-400, four Airbus 340-300, eight Airbus 330-300 and twelve Airbus 320-200. The refleeting program enabled PAL to be dubbed the first airline in the world to operate the full range of new-generation Airbus aircraft.

Asian financial crisis
In 1997, PAL rebranded itself as "Asia's sunniest airline" to cap its new marketing and advertising thrust. In addition to its refleeting program, PAL commenced service to New York City (using Newark Liberty International Airport) via Vancouver. However, this caused the airline to be financially unstable, having acquired too many aircraft while matching them to unprofitable routes. The refleeting program was about halfway through when the full impact of the Asian financial crisis struck the airline industry early in 1998. By March 31, 1997, at the end of the 1996-1997 fiscal year, PAL had reported its largest annual loss of P8.08 billion.
PAL's financial difficulties were compounded by a series of labor disputes that began when the pilots' union staged a three-week strike in June 1998. This was followed by a strike by the ground personnel union on July 22, which ended four days later with the signing of a deal between the union and management. However, PAL's lingering financial troubles continued to take their toll and on June 19, 1998, the company filed for receivership with the Securities and Exchange Commission, which then appointed a committee to oversee the rehabilitation of the flag carrier. Services to Europe, under the helm of General Manager Heinz van Opstal, were discontinued, with staff dismissals and the closure of PAL's European offices. The airline downsized its operations as the Asian financial crisis dragged the region's once-vibrant economies into recession in 1998. The PAL fleet was reduced from 53 to 22 aircraft with the elimination of all turboprop aircraft, eliminating its rural air service and causing the dismantling of its Cebu City hub. With massive lay-offs also taking place, disputes between the airline’s owners and the employee’s union led to a complete shutdown of PAL's operations on September 23, 1998, the first Asian airline to do so and one of the largest corporate failures in Philippine history. Cathay Pacific temporarily took over PAL's domestic and international operations during its fourteen-day shutdown, with Cathay Pacific also showing interest in acquiring a 40-percent stake in PAL during this period. However, no agreement was reached.
PAL flew once again on October 7, 1998 after an agreement between PAL employees and top management, reported to be facilitated by then-President Joseph Estrada, was reached, with services to 15 domestic points out of Manila. On October 29, the flag carrier resumed international services with flights to Los Angeles and San Francisco, with other international services being restored three weeks later. Asian services resumed on November 11 with flights to Tokyo and Hong Kong. PAL gradually expanded its network over the next two months, restoring services to Taipei, Osaka (via Cebu), Singapore, Fukuoka, Dhahran, Riyadh and Seoul. With the aviation industry still in the doldrums, PAL continued to search for a strategic partner but in the end, it submitted a "standalone" rehabilitation plan to the SEC on December 7, 1998. The plan provides a sound basis for the airline to undertake a recovery on its own while keeping the door open to the entry of a strategic partner in the future. PAL presented the new proposed rehabilitation plan to its major creditors during a two-week marathon meeting that started on February 15 in Washington D.C. and ended on March 1 in Hong Kong.
In 1999, PAL submitted its amended rehabilitation plan to the Securities and Exchange Commission that comprised a revised business plan and a revised financial restructuring plan. The plan also required the infusion of US$200 million in new equity, with 40% to 60% coming from financial investors and translating to no less than 90% ownership of PAL. That same year, with the unprecedented boom in air travel, PAL operations were moved to the new Centennial Terminal 2 of Ninoy Aquino International Airport, located at the site of the old MIA terminal building. On August 9, 1999, PAL moved selected domestic flights to the P5.3 billion terminal. Full domestic operations operated from the new terminal on August 10, while international services followed soon after, thus consolidating PAL's flight operations in one terminal for the first time.

Receivership and rehabilitation
In 2000, PAL finally returned to profitability, making some P44.2 million in its first year of rehabilitation, breaking some six years of heavy losses. On September 1, 2000, PAL formally handed over its ownership of its maintenance and engineering division to German-led joint venture Lufthansa Technik Philippines (LTP), the world's largest provider of aircraft maintenance services in accordance with the provisions of its rehabilitation plan, which mandates the disposal of the airline's non-core assets. In August of the same year, PAL opened an e-mail booking facility. In 2001, PAL continued to gain a net profit of P419 million in its second year of rehabilitation. In this year alone, PAL restored services to Bangkok, Taipei, Sydney, Busan, Jakarta, Vancouver and Ho Chi Minh City, while launching new services to Shanghai and Melbourne. A year later, PAL restored services to Guam and Tagbilaran.
The Mabuhay Miles frequent flyer program was launched in 2002, combining PAL's former frequent flyer programs, PALSmiles, Mabuhay Club, and the Flying Sportsman (now SportsPlus) all into one. The PAL RHUSH (Rapid Handling of Urgent Shipments) Cargo service was also re-launched during the same year. An online arrival and departure facility and a new booking system was then launched in 2003. In December, PAL also acquired a fifth Boeing 747-400.
In 2004, PAL launched services to Las Vegas to mark its 63rd year of service. PAL also returned to Laoag and started services to Macau on codeshare with Air Macau. The airline also saw its return to Europe with the return of the airline to Paris and Amsterdam on agreements with Air France and KLM. Service to Paris, however, was inevitably cut due to the formation of Air France-KLM. PAL also continued an overhaul of its fleet with the arrival of two new Airbus A320s and continued modernizing its ticketing systems with the launch of electronic ticketing. For the first time in Philippine history, the airline flew President-elect Gloria Macapagal-Arroyo and Vice-President-elect Noli de Castro to their inauguration in Cebu City. Arroyo rode a chartered PAL Airbus A330-300, while de Castro was aboard a separate Airbus A320.
In March 2005, PAL started services to Nagoya and restored scheduled flights to Beijing after a 15-year hiatus. In response to rival Cebu Pacific's increasing domestic market share, mainly due to its massive re-fleeting program and the its own aging Boeing 737 fleet, PAL signed an agreement for the purchase and lease of up to 18 brand-new Airbus A319s and A320s from Airbus and GE Capital Aviation Services (GECAS) on December 6, 2005.
The first brand-new, GECAS-leased Airbus A319s were delivered to and inaugurated by PAL and President Arroyo in October 20, 2006. It is the first aircraft in the airline's history to offer AVOD-capable inflight entertainment. Later in December, the airline initiated its wide-body re-fleeting program by signing a deal with Boeing in Honolulu for the purchase of two Boeing 777-300ER aircraft to be delivered in 2009, with an option to purchase two more planes in 2011. PAL also signed a separate agreement with GECAS to lease another two Boeing 777-300ER aircraft for delivery in 2010. The purchase of the new 777s effectively canceled previous orders for new 747-400s, ending the production of said aircraft.
In February 2007, PAL became the country's only airline to meet the IATA Operational Safety Audit (IOSA). IOSA is the first global standard for airline operational safety auditing. Later, on June 27, 2007, PAL announced its interest in opening a new hub at Diosdado Macapagal International Airport in Angeles City by committing a $50 million investment on airport infrastructure, as well as proposed routes from Angeles City to Korea, Japan and China. The future PAL terminal at the DMIA would be able to accommodate the Airbus A380. While construction is scheduled to start in January 2008, it is unclear whether or not construction is underway.
On July 2, 2007, PAL purchased two of the three Bombardier Q300 aircraft ordered by its subsidiary Air Philippines for delivery in November the same year. This move was caused by competition among Philippine carriers to service flights to Malay, home to the tropical island of Boracay. PAL later signed a memorandum of understanding that opens the way for the introduction of flights to the southwestern Chinese city of Chongqing. Service to Chongqing began on March 14, 2008, while service to Chengdu commenced on March 18.
The Securities and Exchange Commission, on October 4, 2007, ordered the release of PAL from receivership. This move came nine years after coming within proximity of liquidation amid mounting bills due to the Asian financial crisis. Moments after PAL’s formal exit from rehabilitation, the airline announced plans to attract foreign investments through an international road show to tour around Asia, Europe and North America.
Philippine Airlines was named "Airline Turnaround of the Year" for 2006 and 2007 by the Centre for Asia Pacific Aviation for its "strategic contribution to the aviation industry through a significant transformation by successfully restructuring its operations through innovative cost-cutting measures resulting in operating profits".

Post-receivership and contemporary history
Despite PAL's successful exit from receivership, with the downgrading of the standard of Philippine aviation by the United States Federal Aviation Administration from Category 1 to Category 2 in January 2008, PAL president Jaime Bautista stated that as a consequence of the downgrading, its 2008 growth targets would be lowered. The FAA decision prevents PAL from increasing its flights to the United States from 33 per week or from switching the type of aircraft used unless the airline undertakes a wet-lease agreement with a different carrier. This is in spite of PAL efforts to expand its presence in the US market by opening new service to San Diego and restarting service to Chicago and New York City, as well as Saipan.
On March 31, 2008, PAL announced that it had ordered nine aircraft from Bombardier Aerospace: namely three 50-seater Bombardier Q300 and six 78-seater Bombardier Q400 aircraft at an estimated value of $150 million, all in preparation for the launch of PAL Express, its new regional subsidiary, which was unveiled on April 14, 2008. Using the recently-ordered fleet, PAL Express will primarily fly intra-regional routes in the Visayas and Mindanao from Cebu City, as well as secondary routes to smaller airports in island provinces that are not able to accommodate PAL’s regular jet aircraft. The launch of PAL Express is a ground-breaking step for PAL as it not only marks the first time it is launching a sub-brand in its history but also marks the return of turboprop aircraft to the PAL fleet since the Asian financial crisis. PAL Express operations began on May 5, with eight flights daily between Manila and Malay. Hub operations from Cebu City commenced on May 19 with flights between Cebu and five points in the Visayas and Mindanao, while service to other destinations, including many destinations formerly served by PAL prior to the Asian financial crisis, are scheduled to begin in June and July.

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