Flag carrier Philippine Airlines (PAL) reverted to a net income of P237.958 million for the first nine months of 2014 from a net loss of P2.237 billion in the same period last year.
For the third quarter alone, the airline posted a net loss of P192.3 million but this was 82.5% lower than its net loss of P1.096 billion in the same quarter last year.
Revenue for the first nine months was 102.5% higher with P73.982 billion from P37.439 billion last year, while revenue for the third quarter was up 38.9% to P25.03 billion from P18.02 billion in the same quarter in 2013.
PAL Holdings, Inc., the carrier’s parent company, in a disclosure to the Philippine Stock Exchange, attributed the increase to favorable passenger revenue performance during the quarter with the introduction of new international routes to London, Abu Dhabi, Dammam, Riyadh, Canton, and Haneda, Japan. The enhanced interlining arrangement with Air Philippines for domestic operations also proved to be a positive move.
Passenger revenue contributed the biggest share of 82.2% to the total, with PAL carrying 6.9 million passengers vis-a-vis 3.4 million in the previous nine-month period. Cargo revenues, on the other hand, represented 7.7% of total revenues, and ancillary revenues and income from aircraft operating lease arrangements contributed the rest.
Fuel cost, which remains to be PAL’s biggest operating expense, increased 25% from the year-ago figure of P7.914 billion. The airline increased fuel consumption in 2014 with the introduction of long-haul international routes to London and the Middle East, the increase in domestic flights, and a higher price per barrel from the previous US$126.36 to $128.49. New leases for nine Airbus A321s, 12 A330s and one Boeing B777 aircraft pushed up aircraft lease rentals by P1.218 billion.
CAPA forecasts more losses
Aviation think-tank Centre for Aviation (CAPA) in a recent analysis expects the airline to end 2014 “in the red” again, predicting that “more losses are likely in 2015,” particularly if PAL fails to resolve the “huge aircraft issues it now faces.”
CAPA noted that San Miguel Corp., in its two-year operation of the airline before the buyback by the Lucio Tan group last October, “made some big mistakes with the fleet” with the “overambitious order” for more Airbuses.
The aircraft challenges that were inherited by PAL’s new management team will likely impact the carrier’s profitability for the short term at least, according to CAPA.
PAL’s returning president Jaime Bautista said it was too late to get out of the other 15 A330-300 commitments. He told CAPA the best he could do upon rejoining PAL was to defer the September 2014 delivery to October 2014 and the two October deliveries to November.
With the buyback deal concluded, CAPA said the new business plan could now be prepared and implemented.
Most of the new medium- and long-haul destinations that were launched are expected to be maintained, including London, Toronto, Abu Dhabi, Dubai, Dammam, and Riyadh. But PAL is expected to suspend plans to open more international destinations, such as Australia, although New York is seen to push through in March 2015, as well as possibly Jeddah.
Image courtesy of mapichai at FreeDigitalPhotos.net
