MANILA, AUGUST 30, 2012 (CANADIAN BUSINESS.COM) By AP Flag-carrier Philippine Airlines signed a $7 billion deal on Tuesday to buy 54 Airbus jets as part of an ambitious plan to overhaul its fleet to meet higher demands of transporting passengers and cargo in Asia, the Middle East and Australia, airline officials said.

PAL President Ramon Ang said the first batch of about a dozen wide-body A330-300s and A321s would be delivered in January while the rest of the aircraft would be put in service in the next three years.

The acquisition, the largest single aircraft order ever made by a Philippine carrier, would more than double the airline's passenger and cargo handling capacity and signals an expansion phase after Philippine food and beer conglomerate San Miguel Corp. acquired major stakes in PAL and its affiliate budget carrier Air Philippines Corp. earlier this year.

PAL also plans to buy another 46 aircraft from Airbus and other manufacturers, including Boeing, Ang told a news conference.

"The orders we are placing with Airbus will play a key role in revitalizing PAL and growing trade and tourism in the country," PAL chairman Lucio Tan said.

Twenty-six of the 100 airplanes the airline wants to buy would be for long-distance journeys, like Manila to New York and to Paris, Ang said.

In Washington, U.S. State Department spokeswoman Victoria Nuland suggested American officials have lobbied for Boeing to get the aircraft deal with PAL but added the awarding of the contract to Airbus would not affect Washington's relations with the Philippines, which has been bolstered in recent years.

Asked if the U.S. government lobbied for the Philippines to award the deal to Boeing over Airbus, Nuland said: "We always advocate for U.S. companies, particularly when there's a big contract at stake."

"But, you know, nations make sovereign decisions and they make them based on their own set of criteria," Nuland said.

A Philippine Airlines official said the company awarded the huge contract based purely on business criteria and without prejudice to any company. The official spoke on condition of anonymity for lack of authority to talk to reporters.


Associated Press writer Matthew Pennington contributed to this report from Washington.

Chief News Editor: Sol Jose Vanzi

All rights reserved