( Gulf ) - Philippine Airlines, the nation's biggest carrier, may delay a plan to add flights to Guam, San Francisco and Los Angeles after US regulators lowered the Southeast Asian nation's air-safety rating.
The only Philippine carrier with flights to the US planned to expand its Guam service by May and its San Francisco and Los Angeles flights by year-end, company president Jaime Bautista said in Manila. "We won't be able to sustain growth in the US in the coming fiscal year," Bautista said.
Revenue from US flights has been growing at as much as seven per cent a year, he said. US and Canadian flights account for a fifth of total sales.
The US Federal Aviation Administration (FAA) lowered the Philippines' aviation safety rating to Category 2 from Category 1 "due to serious concerns,"about local regulation of airlines, the US Embassy said.
US nationals were advised to fly to and from the Philippines on airlines regulated by Category 1 countries.
While Philippine carriers may continue current flights, they'll be under "added surveillance," the embassy said. The airline can only add to its current 33 flights to the US by leasing planes and hiring pilots from a carrier regulated by a Category 1 country, company spokesman Rolando Estabillo said.
Philippine Air said it entered into similar leasing arrangements from 1994 to 1996 following a rating cut, resulting in "heavy losses." Philippine Air suspended debt payments in 1998 and posted annual losses through the year ended March 2004.
Earnings will suffer "significant impact,"if the FAA doesn't raise the Philippines' rating in time for the carrier to expand as planned next year, Bautista said. The airline plans to start serving New York, Seattle and other US cities when six Boeing 777-300ER planes it had agreed to purchase and lease begin arriving in September 2009, he said.
The airline plans to boost capacity 40 per cent a year starting 2009. The carrier, owned by tycoon Lucio Tan, expects to boost sales and recurring profit by eight per cent to 10 per cent by the end of March.