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PAL annual operating budget at $230M

BELEAGUERED Philippine Airlines (PAL) needs at least $230 million annually to continue operating.

In a statement, company spokes-person Cielo Villaluna said half of the estimated annual budget will come from cost-cutting measures such as crew reduction and the spin-off of non-core units, and the rest from cash-generating activities arising from aggressive sales and marketing initiatives.

Last July, PAL reduced cabin crew in its Boeing 747 from 18 to 16. International standards require at least 15 crew members on such an aircraft.

“The cabin crew union demands that funds saved from manpower reduction should be equally divided among them. But this, unfortunately, is not the aim of the whole exercise,” Villaluna said.

“If we heed their call to give them the savings, we may have satisfied crew members today but no airline to speak of in the long term,” she added.

“Contrary to the cabin crew union’s claim, there has been no diminution of employee rights or benefits. They work a little bit more for the same pay, which simply means more efficiency.”

Villaluna said, “Estimated savings from crew reduction as measured by our Cabin Services is about P70 million a year, not P141 million as claimed by the Flight Attendants’ and Stewards’ Association of the Philippines.”

PAL reported revenues of $426.7 million for the first quarter of its fiscal year 2010-11, a 30% improvement or $99 million over last year’s $327.7 million.

During the first three months of its current fiscal year, the airline benefited from improvements in passenger traffic as well as cargo, reflecting signs of economic recovery worldwide. Higher yields generated per seat offering also complemented growth in passenger demand.

During its last fiscal year ending March 2010, PAL reported a net comprehensive loss of $14.4 million.


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