Executive Summary

Introduction
Philippine Air Lines (PAL), established on February 26, 1941 holds the difference of
being the nationwide flag service provider of the Philippines together with Asia's earliest
industrial airline company running under its initial name. Headquartered in Pasay City, Metro
Manila, PAL acts as an essential web link attaching the Philippines to the remainder of the
globe, playing an important function in fostering tourist, profession, and also social exchange.
PAL runs as a full-service airline company, giving residential along with worldwide guest
transportation, freight solutions as well as travel-related offerings such as ticketing, travel
plans, as well as a commitment compensates program called Mabuhay Miles. It flaunts a
thorough network of over 30 residential as well as 40 global locations, consisting of vital
markets in Asia-Pacific North America, the Middle East, Europe coupled with Oceania. Its
primary centers are the Ninoy Aquino International Airport in Manila, Mactan-Cebu
International Airport, as well as Clark International Airport terminal.

PAL employs around 6,000 people, consisting of proficient pilots, flight attendants,
ground staff, engineers, and administrative personnel, all committed to making sure
functional quality plus client complete satisfaction. The business runs a contemporary fleet of
airplane, consisting of the Airbus A350-900 along with Airbus A321, allowing effective long
run as well as regional trips while advertising durability via fuel-efficient modern technology.
For many years PAL has actually gained an online reputation for offering outstanding
solution, acknowledged by distinctions such as the respected Skytrax 4-Star Airline
Certification. This acknowledgment highlights the airline company's dedication to providing
first-rate experiences for its guests.

In 2022, PAL attained substantial turning points following its monetary restructuring
reporting PHP 97 billion in revenue and also PHP 4.2 billion in profit, indicating a solid
healing from the obstacles positioned by the COVID-19 pandemic and also its Chapter 11
insolvency declaring in 2021. This restructuring enabled the airline company to support its
funds enhance procedures and also concentrate on lasting development campaigns. Today,
PAL remains to adjust to the dynamic aeronautics landscape concentrating on technology
electronic change coupled with boosted customer support to enhance its market placement
coupled with fulfill advancing customer needs.
 But more than being a corporation genuinely invested in its vision of being the pride
of the Philippines, PAL also acts as one of the forerunners in Philippine representation at the
global platform. The airline goes beyond airline service to become an economic driver by
promoting tourism, jobs, and continuing to unite Filipino communities from across the world.
On the other hand, the airline faces significant challenges for its survival in the extremely
competitive and volatile industry due to fluctuating fuel prices, market demands, and
environmental sustainability.

This paper, therefore, unfolds a strategic plan for Philippine Airlines covering the
period 2023 to 2025. It seeks to address these challenges by focusing on financial stability,
operational efficiency, customer experience, market expansion, and sustainability. With the
strengths pressed into service, the weaknesses overcome, and the emerging opportunities
capitalized upon, PAL can sustain its legacy as a premier airline and soar as a symbol of
Filipino excellence in global aviation.

Figure 1. Philippine Airlines Logo

The logo design for Philippine Airlines has actually carried out a number of redesigns
since it was first produced. Several blue triangulars plus 2 red rectangular shapes compose
the present logo design which additionally includes a red triangular positioned on top of a
blue triangular. An obvious depiction of the Philippine flag is the yellow triangular with a
yellow sunlight on it. Below them is the logotype which is placed slanting. A sans serif called
Helvetica Bold Oblique is significantly near to the logotype font style.
Philippine Airlines is dedicated to supplying a comprehensive, top quality trip
experience to practically every one of our guests. They make every effort to give a solution
that will certainly generate favourable outcomes along with making their customers pleased.
They would love to provide our customers an experience they will certainly prize by making
a constant initiative to boost our solution distribution, as well as on a regular basis informing
our employees. With our customers in mind, we are continually functioning to improve plus
fine-tune our existing procedures as well as treatments. Our dedication to offering the
solution that is needed by people as well as that our customers absolutely are entitled to is our
very first. And also leading top priority. We are devoted to developing a lasting organization
that is concentrated on wellness, protection, education and learning capacities as well as ideas
yet additionally assumptions of our essential possessions, our staff member ‘s people that are
backed by considerable training, advanced modern technology plus modern suggestions such
as online training courses.
Core Values
● We grow a successful and empowered team.
● We act with passion and aim for excellence.
● We embrace and drive change.
● We put our customers first.
● We exemplify the Best of the Filipinos spirit.
Company’s Vision and Mission
Vision

To be the airline of choice in all markets we serve.

To be the source of pride for Filipinos everywhere.

Mission

To deliver a safe, reliable, efficient, and pleasant travel experience exceeding passenger
expectations.

To provide a satisfying career to our employees and adequate returns to stockholders.

To represent the best of the Philippines, the best Filipinos to the world.

Company’s Vision and Mission IMPROVED

Vision

To be the airline of choice in all markets we serve.

To be the source of pride for Filipinos everywhere.

Mission

To deliver a safe, reliable, efficient, and pleasant travel experience exceeding passenger
expectations.

To provide a satisfying career to our employees and adequate returns to stockholders.

To represent the best of the Philippines, the best Filipinos to the world.

To showcase the Philippine’s excellence and culture through world-class service enhanced by
smart technologies

why it improved?

While embracing global competitiveness, the vision retains its emphasis on Filipino pride,
showcasing the nation’s excellence in aviation on a larger scale.

Comment or evaluate the vision and mission statements using David’s framework and other
criteria discussed in class. Recommend changes if needed. Or develop new vision and
mission statements. Explain how the recommended vision and mission meets the criteria
based on David’s framework, including how it takes into account ethical principles and
nation building.

Vision Statement Evaluation:

Conciseness: The vision is concise and clear. It avoids unnecessary details, which is a
strength.

Future Focus: It poses a future-looking goal without actually incorporating the words of
innovation and sustainability, that are of utmost importance to contemporary aviation.

Challenging and Inspiring While challenging to Filipinos, this might be a lot more inspiring
to others across the world, more innovative or sustainable.

Alignment with Core Values: It highlights pride among Filipinos, which fits into national
values. More universal principles like excellence, inclusivity, and responsibility to the
environment could also be included.

Mission Statement Evaluation:

Customer Focus: Mentioned in this statement are issues of providing an "uplifting travel
experience" or meeting the "passengers' expectations.".

Employee and Stakeholder Considerations: It addresses employee satisfaction and returns to

stockholders, thereby meeting another key criterion.

Philosophy and Core Values: It has no direct reference to ethics, innovation, or sustainability.

Breadth: The mission captures operational aspects (safety, reliability, efficiency), but it could
be broadened to include cutting-edge technology and global leadership.

Nation-Building: The inclusion of showcasing the Philippines’ excellence highlights nation-

building but can be made more actionable by referencing economic contributions or cultural
promotion.

Give recommendations on how you will communicate the vision and mission to the
employees and other stakeholders.

Integrate vision and mission into the employee onboarding process, in the daily
operations, recognition programs, and prominently post it in the workplace and in digital
platforms. Leverage multimedia campaigns, events, and customer touchpoints to
communicate the message with the stakeholders, ensuring all communications channels are
aligned. Have feedback mechanisms and continually update employees and stakeholders with
regards to progress toward the goal. Reinforce the message through tools like social media,
emails, town halls, and visual materials. Monitor understanding and engagement by using
surveys and metrics for continuous improvement.

Internal Assessment

Financial Analysis

Philippine Airlines has experienced many setbacks since the pandemic started in the
year 2020, and this is clearly shown in the company’s financial reports. These challenges
have affected the company’s overall performance. Financial ratios are used as a tool to
evaluate the stability and operational efficiency of an industry. Thus, in this chapter, the
researchers delved into analyzing the financial ratios of PAL Holdings using the publicly
documented annual report.
Liquidity Ratios

Table 1

Current Ratios

2023 2022 2021

Current Ratio 0.88 0.88 0.84

Table 1: Current Ratios

The Table 1 presents the current ratios of PAL Holdings of 0.88 for 2023, 0.88 for
2022, and 0.84 for 2021. It shows a slight 4% improvement in the current ratio compared to
2021. In the aviation industry, a current ratio of below 1 is acceptable due to the capital-
intensive nature of the industry. As such, based on this analysis, PAL Holdings is doing
reasonably well. However, to maintain liquidity, it is crucial for the company to manage its
current assets and liabilities effectively. The company's current assets are primarily composed
of cash and cash equivalents, receivables, expendable parts, fuel, materials and supplies,
short-term investments, and other current assets. Notably, in 2021, the company’s current
ratio was the lowest among the observed years, largely due to the absence of short-term
investments, which contributed to a reduced total of current assets. Additionally, the
company reported a notes payable amounting to 1,386,879, leading to a higher debt level
compared to the subsequent years.

Table 2

Quick Asset Ratios

2023 2022 2021

Quick Asset Ratio 0.55 0.61 0.73

Table 2: Quick Asset Ratio

The table 2 highlights the Quick Asset ratios of PAL Holdings composed of 0.73,
0.61, and 0.55 for the years 2021, 2022, and 2023, respectively. By looking at these ratios, it
has a downward trend which is not good especially for attracting potential investors,
shareholders and creditors as well. The decline in the quick asset ratio is due to its increase in
the short-term liabilities specifically in the year 2022 and 2023. It doubles the amount of the
unearned transportation revenue of 11,903,788 in 2021. This also indicates that its most
liquid assets are not enough to cover its short-term obligations without relying on the
inventories. Additionally, the absence of short-term investments affects the company’s ability
to manage liquidity. A ratio below 1 can increase the financial risk of the company even
though Philippine Airlines (PAL) is a capital-intensive industry. This could have an effect in
cash flow problems because it seems like PAL has still a lot of remaining balance in
receivables that could indicate a problem in the collection of payments.

Leverage Ratios

Table 3

Debt-to Equity Ratio

2023 2022 2021

Debt-to-Equity 2.90 8.78 73.82

Ratio

Table 3: Debt-to Equity Ratio

The table 3 illustrates the company’s Debt-to-Equity Ratio which are 2.90, 8.78,
73.82 from 2023, 2022, 2021, respectively. This three-year period shows that PAL Holdings
significantly improved in leveraging its company because of its positive shift from 73.82 D/E
ratio to 2.90 D/E ratio. Upon analyzing the trend, the researchers conclude that the 2021
filing of bankruptcy could likely be linked to the company's increase in D/E ratio in 2021.
PAL Holdings filed for Chapter 11 bankruptcy protection in September 2021 in the United
States, which allowed the airline to restructure its debts while continuing to operate. The
significant decrease in year 2022 of the company is because PAL did debt restructuring upon
filing the bankruptcy. The company was able to negotiate to extend credit terms and have a
new access for financing called “Debtor-in-Possession” and did cost cutting measures to
ensure that the company will be back on its track.
Table 4

Asset-to-Equity Ratio

2023 2022 2021

Asset-to-Equity 6.60 16.07 114.73

Ratio

Table 4: Asset-to-Equity Ratio

Table 4 illustrates the Asset-to-Equity Ratio of Philippine Airlines (PAL) for the years
2021, 2022, and 2023, with respective ratios of 114.73, 16.07, and 6.60. This data highlights
a clear downward trend in the ratio over the three-year period, with 2021 showing the highest
ratio and 2023 the lowest. The significant decline in the Asset-to-Equity Ratio reflects
substantial changes in PAL’s financial structure. Specifically, in 2021, the company was
largely financed by shareholders' equity, indicating that PAL relied heavily on its
shareholders to fund its operations during that period. This is the inverse ratio of Debt-to-
Equity ratio. However, even though the company have made significant changes over the
years, the fact that for every peso of equity, the company has 6.60 pesos in assets. To support
its comprehensive recovery plan, PAL further strengthened its capital structure by securing
505 million USD in long-term equity and debt financing from its majority shareholder,
demonstrating a strategic shift towards a more balanced financing approach.

Profitability Ratios

Table 5

Profit Margin

2023 2022 2021

Profit Margin 0.12 0.07 1.03

Table 5: Profit Margin

 The table 5 shows the inconsistency of profit margin of Philippine Airlines (PAL) for
the three-year period starting from 2021 up to 2023. In 2021, the company showed a Profit
Margin ratio of 1.03, which is extremely high especially in the airline sector with competitive
competition. Then, in 2022, the ratio declined to 0.07 and increased to 0.12 in 2023. This
ratio shows inconsistency, with a sharp decline in trend in 2022. The profit margin ratio
indicates the company's performance in generating net income after deducting the expenses
of the company. The decline of the profit margin in the year 2022 to 2023 is likely linked to
the increase of PAL expenses. In 2021, the company undergoes financial restructuring that
affects the revenue by selling its aircraft and other resources that leads to high profit margin
ratio. However, in the year 2022, the sharp decline from 1.03 to 0.07 ratio suggests that the
company faced higher operating costs like flying operations, maintenance and aircraft and
traffic servicing, and others unlike the previous year. Note that in 2021, the company has an
expenses of only 62,797,816 (in thousands) and it doubles in 2022 and 2023. The fluctuations
of profit margin can emphasize the stability of management of the business. However, we
cannot turn a blind eye on how PAL is still striving for recovery.

Table 6

Return on Assets

2023 2022 2021

Return on Assets 0.10 0.05 0.31

Table 6: Return on Assets

The table 6 illustrates the inconsistency of return on Asset of Philippine Airlines. In

the year 2021, PAL has a ratio of 0.31 which means that for every 1 peso of assets of PAL,
the company generates a 0.31 in profit. For the next period, the company has 0.05 Return on
Assets which indicates that for every 1 peso of asset the company has 0.05 profit. This is
lower than the previous year. Lastly, in the subsequent year PAL has 0.10 Return on Asset
which increased 0.05 ROA from the last period. This performance of PAL seems that the
company should still focus on improving the profitability and asset utilization of the company
to ensure a stable financial performance for quantitative analysis.

Table 7
Return on Equity

2023 2022 2021

Return on Equity 0.64 0.81 35.87

Table 7: Return on Equity

The table 7 on the analysis of financial ratios of the Philippine Airlines is the Return
on Equity (ROE). The ROE of PAL has a downward trend from 35.87 in 2021, 0.81 to 2022
and 0.64 in 2023. The high ratio of PAL in the year 2021 is because of the restricting of the
company from its filing of bankruptcy. Thus, the sharp decline of ROE in 2022 reflects that
PAL is in the process of bringing the normal state of the company’s ROE. The year 2022 is
the year of recovery of PAL, thus this indicates that PAL is still struggling to generate profits
relative to its equity after the pandemic which still posed a challenge to not only in PAL but
in the aviation industry. Lastly, the 0.64 ROE indicates that PAL has 0.64 pesos in profit for
each 1 peso of equity. These ratios suggest that the company should continue to work on
improving its strategies to enhance its operational efficiency, customer satisfaction, and cost
cutting measures to achieve the maximization of shareholders wealth.

Organizational Structure

Figure 2: Organizational Structure

 Figure 3: Board Composition

Figure 2 shows the organizational chart of Philippine Airlines. In charting the future,
the Philippine Airlines formed a diverse group of individuals that will govern the company in
shaping its success. The company uses a structured organizational hierarchy which is
common for large company. This type of structure is organized or placed accordingly based
on their respective roles and skills. The Board of Director is placed on top responsible in the
corporate governance and strategic decisions. The Board of Directors of Philippine Airlines
consists of the Executive Committee, Audit and Risk Management Committee, Corporate
Governance Committee, and Nomination Committee. These committees are responsible for
overseeing the company’s compliance with regulations, operations, internal control, and risk
management system. Under this is the President, CEO, COO which are placed in the same
position based on the chart. Lastly, under them are Treasurer, Corporate Secretary, and Chief
Finance Officer/Compliance Officer.

On the other hand, figure 3 shows the composition of the Board of Directors that has a
total of 9 capable and competent individuals from various backgrounds, areas of expertise,
and years of experience. There are two (2) women and seven (7) men in the board of
Directors. Among them are three (3) Independent Directors. According to the Corporate
Governance Manual, the company must integrate two (2) Independent Directors or 20% of
the board members. Moreover, the company reported that 78% in the board of Directors are
Non-Executive Directors and 22% are Executive Directors.

Recommended Improvement/Strategy for Organizational Structure

 Upon analyzing the organisation of Philippine Airlines, the researchers observed that
the company uses structured organizational hierarchy to manage its operations effectively.
However, the researchers found two (3) issues regarding the organizational chart of
Philippine Airlines. First, upon looking at the organizational chart of the company assuming
that the researchers did not use any resources to identify and determine the person-in-charge
in the company, the researchers conclude that there is a lack in the transparency of the chart.
The chart presented by Philippine Airlines did not include the two levels of management
which are the middle and lower management. Thus, when a third party or interested
individual looks upon the organizational chart, they might be confused on how the chain of
command or understanding the roles affect the overall goals of the company. Second, the
functional departments are not included in the organizational chart which is quite confusing
such as the operations, Finance, Marketing and Sales, Human Resources, and Information
Technology. These functions are not visible in the organizational chart. Lastly, the company
uses a structured organizational chart which is good. However, there are some strategies that
PAL might want to consider to enhance the streamline decision making, enhance
communication, leverage data security, and customer satisfaction.

The researchers come up with the idea of implementation of decentralized decision

making to empower faster responses to operational issues and integration of cross-functional
departments that can enhance the customer satisfaction by efficiently resolving the issues
smoothly and enabling to foster more flexible strategic initiatives that require collaboration.
These recommendations or strategies will help Philippine Airlines not only improve
operational efficiency but also in adapting to the dynamic environment of the airline industry
and the customers preferences.

Market Positioning Map

The Market Positioning Map is a representation of the competitive environment among

airline companies, comparing their standings in terms of price and service quality. The
vertical axis reflects price levels ranging from low to high, while the horizontal axis indicates
service quality from basic to premium. It helps conduct a comparative analysis with peers
such as Cebu Pacific, AirAsia, Singapore Airlines, and many others, which offers important
insights into the competitive landscape of PAL, such as its strengths, weaknesses, and
strategic opportunities.
 Figure 4: Market Positioning Map
Philippine Airlines is a high-price, premium service airline. The airline would place major
focus on passenger comfort and the in-flight amenities and also provide a premium travel
experience. Its business travelers as well as its high-value customers were said to match those
of the global competitors Singapore Airlines and Cathay Pacific. PAL, however, faces tough
competition from low-cost carriers such as Cebu Pacific and AirAsia, which are dominating
the budget-friendly, basic-service market. Its challenge is to serve price-sensitive travelers
without losing its premium brand.

If the airline industry is to continue competing and growing, then Philippine Airlines should
take up a hybrid strategy, combining premium services with cost-efficiency. This will make
PAL more competitive in comparison with the low-cost carriers like Cebu Pacific and
AirAsia.

Key strategies for PAL are segment-based pricing, which would be premium services to
business travelers and economy options with competitive, unbundled fares to price-sensitive
customers. This would enable PAL to compete with low-cost carriers while preserving its
premium status. Improvement in operational efficiency, such as flight schedule optimization,
fuel cost reduction through more efficient aircraft, and digital transformation, will reduce
operating costs and improve profitability.

Improving the connection, especially to secondary cities, will expand PAL's network of
domestic and regional route services, thus reducing the overcrowding at major hubs, like
NAIA, giving way for PAL to compete more directly with budget carriers. Premium economy
class, loyalty programs, and digital improvements can further differentiate PAL from budget
airlines.

Strategic partnership with international airlines, boards, and travel agencies, will open the
gates for wider markets and improved passenger options for PAL. Its heritage, reliability, and
excellent service will be best highlighted by targeted marketing campaigns, which will make
it stronger and a customer loyal airline brand.

Philippine Airlines (PAL) has positioned the firm as a premium player within the airline
industry with themes focused on luxury services, customer experience excellence, and
comprehensive coverage of worldwide destinations. The marketing strategy at PAL has both
strengths and weaknesses in comparison to its competitors and their low-cost and premium
peers.

Premium service is one of the major strengths of PAL. It distinguishes itself with quality in-
flight experience in terms of gourmet meals, wide seat space, and high standards of customer
service. The luxury positioning appeals to business travelers and long-haul passengers who
value comfort and exclusivity. In this sense, it differs from LCCs that provide lower-quality
services and charge for all add-ons. Maintaining such premium standards, PAL will appeal to
passengers willing to pay a premium for a superior experience.

It also enjoys PAL's wide international network. Because it is the Philippines flag carrier, it
connects its passengers to multiple international destinations. This is ideal for any passenger,
business or leisurely travelers. Its international reach does not only give prestige to the airline
but also assures a smooth travel, establishing PAL as one of Southeast Asia's top airlines. This
global reach allows it to outshine the country's domestic airlines and therefore becomes the
first airline on a person's list when traveling overseas.

PAL also leverages its Mabuhay Miles loyalty program to increase customer retention. It does
this by offering frequent flyers miles that can be redeemed for free flights, upgrades, among
other perks. This program helps the airline strengthen it with high-value customers as a
means of long-term success. The program helps the airline to promote loyalty particularly
among business travelers who earn most of the revenue for PAL.

In addition, PAL's focus on Filipino hospitality is an essential element in its marketing. With
the airline promoting "the heart of Filipino hospitality," it connects not only with the Filipino
traveler but also with international passengers who love warm and personalized service. This
cultural difference separates the airline from its competitors and creates emotional appeal for
its passengers.

Despite these strengths, there are weaknesses that limit PAL's competitiveness in some
market segments. One major weakness is its price structure. While PAL supports its higher
fares with premium services, it may lose budget-conscious passengers who cannot afford
luxury experiences. The unbundled fare model of the airline in economy class also restricts
the appeal to price-sensitive customers who are attracted to LCCs' low base prices, making it
difficult for PAL to compete in the budget travel segment.

PAL also suffers from operational inefficiencies. For instance, it encounters problems in fleet
management and flight delays. These inefficiencies tarnish its reputation. Although it
provides quality services, these inefficiencies negatively impact the customer experience,
especially of a premium airline that would expect punctuality. More efficient operations of
LCCs such as Cebu Pacific and AirAsia, with simpler business models, enable them to fly
more frequently at lower cost, thus giving them an edge.

In addition, the domestic network of PAL is not as extensive as that of low-cost carriers.
Although PAL has a good global presence, its domestic reach is not broad, and low-cost
carriers continue to lead the Philippine market with more affordable and available flights to
secondary cities. Expanding its domestic route could help PAL better cater to the growing
demand for regional travel and compete effectively with low-cost carriers.

Lastly, the very strict pricing model of PAL may discourage price-conscious travelers who
prefer flexibility like only paying for the services they need, such as baggage or meals. LCCs
appeal to price-sensitive, tech-savvy consumers through unbundled fares and promotions that
are more attractive to consumers willing to sacrifice luxury for affordability. The full-service
approach of PAL may be perceived as less flexible and not as appealing to this market
segment.
 Figure 5: Map Locating the Firm’s Operation
Philippine Airlines, or PAL for short, is one of the Philippines' leading flag carriers
that have their various domestic and international hubs both in Manila, Cebu, Clark, and
Davao. Philippine Airlines flies to 25 destinations domestically and 28 across Asia, Australia,
the Middle East, Europe, and North America. Among the distinctions is that PAL has direct
flights from the Philippines to the U.S., Hawaii, Canada, New Zealand, and Western Europe,
giving it a strong edge over competitors with international connectivity.

Utilizing this vast network, the marketing strategy of PAL emphasizes premium
services, including luxurious in-flight experiences targeting business and long-haul travelers
looking for comfort and exclusivity. This strategy distinguishes PAL from low-cost carriers
such as Cebu Pacific and AirAsia. However, PAL has disadvantages because of high
operational costs and must compete with budget airlines, whose pricing models are more
flexible.

Value Chain Analysis

Value chain analysis is a method used to assess each activity within a company's value
chain to identify areas for potential improvement. It encourages the examination of how each
process contributes to or detracts from the overall value of a product or service. This analysis
can provide insights into enhancing efficiency and creating a competitive advantage.
 Figure 6: Value Chain Analysis
Primary Activities

Inbound Logistics

Inbound logistics are the activities involved with receiving, storing, and distributing inputs
for the operation. With Philippine Airlines, it coordinates with aircraft manufacturers, fuel
suppliers, and maintenance contractors. For PAL, it must get aircraft spare parts on time, find
a reliable partnership for fuel, and store critical equipment properly. Efficient inbound
logistics minimize downtime and enhance operational efficiency, which is vital to
maintaining flight schedules.

Operation

Operations refer to the process of bringing inputs into the final service offer. In Philippine
Airlines, for instance, its core primary airline functions involved arranging its flight
schedules, ensuring safety and maintenance checks on aircraft, and monitoring passengers
who are on board. Primary management areas include flight crew handling, baggage services,
and preparation of the aircraft through catering and cleaning services. PAL promised
customers dependable and punctual service through turnaround times and number of delays.

Outbound Logistics

Outbound logistics delivers the final service to the customer. For PAL, it involves ticketing,
boarding, and a seamless experience from airport to airport. Efficient outbound logistics are
therefore linked to the integration of technology into booking systems, efficient boarding
processes, and coordinated baggage handling. The ground-handling teams and the airport
authorities are also in partnership with PAL to ensure that passengers travel comfortably to
their destinations.
Marketing and Sales

Marketing and sales focus on advertising the airline's services to drive customer bookings. In
this regard, PAL applies various strategies, such as advertising campaigns, loyalty programs
like Mabuhay Miles, competitive pricing, and targeted promotions, to attract and retain
customers. It focuses on its position as the flag carrier of the country through premium
offerings such as business-class services, in-flight entertainment, and extensive regional
connections to enhance its market position.

Services

Post-flight services, customer care, and support functions for the service activity are provided
to help better the customer's experience. For Philippine Airlines (PAL), it means addressing a
customer's concerns, including the handling of flight disturbances, such as delay and
cancellation, provision of lounges and in-flight meals. There is always a strong necessity for
effective complaint management. For instance, at the premium lounges provided by PAL,
customers will want to have more experiences there if the services of the in-flight attendants
are remarkable, and so on.

Support Activities

Firm Structure

Firm infrastructure includes activities such as planning, finance, and risk management. The
PAL corporate governance focuses on maintaining the stability of funds, fulfilling regulatory
requirements, and keeping safety standards. Strategic initiatives are expanding routes,
mitigating fuel price risks, and upgrading the fleet to enhance service quality and reduce
operational costs.

Human Resources Management

Success at PAL largely depends on the employees who work for them, which may include
pilots, cabin crew members, ground personnel, as well as customer service teams. Basic or
core main activities in maintaining such an operation would entail recruitment, training, as
well as compensation management of this workforce made up of professionally motivated
individuals. At PAL, investments into pilot training programs, workshops in customer service,
and certifications related to safety are deemed indispensable to maintaining high levels of
service. Human resource management will be instrumental in ensuring that employees
provide excellent customer experiences, ensuring safety and operational efficiency.

Technology Development

The core enabler for PAL is technology that makes it competitive. Equipped with the latest
aircraft, fuel-efficient engines, advanced in-flight entertainment systems, and modern
booking platforms, the airline allows the customer to book his flights online, check-in online,
and receive updates on their flights in real time. Technology also assists operations in the
form of automated baggage handling, maintenance systems, and data analytics that are used
to optimize routes taken by flights.

Procurement

Procurement is the acquiring of inputs and resources for operating. For PAL, it means
acquiring aircraft, buying aviation fuel, and contracting for services such as catering,
maintenance, and IT systems from suppliers. Good procurement results in cost savings, thus
ensuring that the most productive resources are utilized. Strategic procurement decisions,
such as acquiring fuel-efficient aircraft, give PAL the opportunity to earn higher profits while
supporting sustainability and environmental protection.

The Philippine Airlines or PAL Philippine Airlines (PAL) has made notable strides in e-
commerce through its website and digital initiatives.
The Good Points are:
A. User Friendly Booking system wherein their websites offer a streamlined interface for
booking flights, managing itineraries, and accessing information. The integration of
cloud-based infrastructure has improved speed, reliability, and security, ensuring a
smoother user experience.

B. Corporate E-Commerce Solutions in which PAL uses the Datalex Digital Commerce
Suite, which supports unified pricing and order management. This system allows it to
cater to both individual and corporate clients efficiently, including features like
combined payments for corporate accounts.

C. Loyalty Program Integration in which the Mabuhay Miles program has been
modernized with features such as real-time updates on loyalty points and exclusive
offers, making it more accessible and rewarding for frequent flyers
The Bad Points are:
A. Customer Support Accessibility, despite of technological enhancements, there have
been occasional complaints about response times for customer service inquiries
through the website or application.

B. Complexity for First-Time Users, Although the website is functional, new users might
find some aspects like managing multi-city bookings or navigating promotional fares a
bit confusing initially.

C. Mobile Optimization Gaps, while the desktop site functions well, some users have
reported inconsistencies in the mobile experience, such as slower load times or
navigation issues on certain

Financial Performance of Philippine Airlines

The Philippine Airlines posted a Net Income of of ₱8.075 billion in the first nine months
of 2024, lower than ₱19.26 billion in the same period of 2023. The decline was driven by
higher expenses (₱120 billion, up from ₱109.7 billion) due to fleet upgrades and higher
operational costs. Despite this, the company continued to focus on long-term growth by
expanding its network and fleet, showing moderate revenue resilience at ₱132.4 billion
during this period.

Passenger and Market Growth of Philippine Airlines

In the year 2024, Philippines Airlines served 11.7 million passengers, a 6% year-on-year
increase. The airline also reported a 13% growth in passenger volumes in the first half of the
year, signaling demand recovery post-pandemic. However, market challenges, including
rising costs and capacity rebalancing remains.

The Value Challenges of Philippine Airlines

Although Philippine Airlines (PAL) has improved its profitability and operational
capabilities, sustaining its competitiveness in the face of rising costs and aggressive
investments is critical. Analysts also point to the need for PAL to further improve its
operational efficiencies to keep growth momentum.

In conclusion, Philippine Airlines strategy reflects its focus on growth through

investments and network expansion, making it a crucial player in the Southeast Asian
aviation market.
Analysis of Strengths and Weaknesses
Strengths

1. The firm’s strong brand recognition as a pioneer in Asia gives it a significant

market edge and consumer trust.
2. Its proven financial recovery capability demonstrates resilience during challenging
times.
3. A wide range of destinations, both international and domestic, caters to diverse
customer needs.
4. The company’s premium service quality enhances its appeal to high-value
customers.
5. Sustainability initiatives align with global trends, improving its public image and
environmental compliance.
6. An expanded network ensures connectivity and competitive market coverage.
7. Continuous passenger growth indicates effective market demand and trust.
8. Customer loyalty programs create repeat business and reinforce brand attachment.
9. The firm’s adherence to safety standards enhances its reliability and reputation.
10. Adoption of digital innovations streamlines processes and enhances customer
experiences.
Weaknesses
1. The retrenchment of 30% of the workforce in 2021 could affect employee morale
and service quality.
2. Financial instability from 2021–2022 limits investments in growth and
improvements.
3. Weak cybersecurity exposes the firm to potential data breaches and operational
risks.
4. Ineffective marketing strategies hinder its ability to fully capitalize on market
opportunities.
5. Inconsistent customer satisfaction may damage its reputation and reduce customer
retention.
6. High operating costs could reduce competitiveness, especially against budget
carriers.
7. Subpar mobile app experience can negatively impact tech-savvy customers.
8. Rising competition from low-cost carriers pressures pricing and market share.
 9. A limited fleet size restricts its ability to expand services or handle growth surges.
10. A vulnerable profit margin challenges long-term profitability and stability.

In conclusion, the firm demonstrates substantial strengths in brand recognition, service

quality, and sustainability efforts, making it competitive in the market. However, it must
address weaknesses such as workforce issues, cybersecurity gaps, and operational
inefficiencies to ensure sustained growth and success.
IFE MATRIX OF PHILIPPINE AIRLINES

STRENGTH Weight Rating Weighted Score

1. Brand Recognition (Pioneer 0.15 4 0.60
in Asia)
2. Capable of Financial 0.10 3 0.30
Recovery
3. Wide range of international 0.20 4 0.80
and domestic route
destinations
4. Premium Service of 0.15 3 0.45
Customers
5. Initiatives of sustainability 0.10 2 0.20
WEAKNESSES
1. Workforce retrenchment by 0.10 1 0.10
30% in2021

2. Financial Instability (2021- 0.10 2 0.20

2022)

3. Weak cybersecurity 0.05 1 0.05

4. Weak marketing strategies 0.05 2 0.10
5. Inconsistent customer 0.10 2 0.20
satisfaction
Total: 1.00 3.00
 The strengths of Philippine Airlines are rated higher because they contribute PAL’s
competitiveness. For example, “Brand Recognition” received a high weight (0.15) and a high
rating (4) due to its significant impact. On the other hand, weaknesses are rated lower
because they negatively affect the company. For example, “Workforce retrenchment” has a
low rating (1) because it represents a major issue. The internal evaluation matrix of IFI of
Philippine Airlines reveals that that the company has a total score of 3.00, which indicates a
strong internal position. The score is above the average benchmark of 2.5, suggesting that the
company’s strengths outweigh its weaknesses and provide it with a competitive advantage.
In order for PAL to build on its strengths and address its weaknesses, We recommend to
Invest in cybersecurity and improve its technological infrastructure to protect customer data
and build trust, enhance marketing strategies to increase brand reach and awareness, address
workforce issues through retention strategies and provide support to employees during
financial recovery efforts and focus on initiatives to ensure consistent customer satisfaction,
such as better customer support and quality management.
By leveraging its strengths and mitigating its weaknesses, the company can continue to
maintain its competitive edge and further strengthen its market position.