PAL posted lower profit of $31.6m in first quarter

by Jeremiah F. de Guzman
August 22, 2010
ManilaStandardToday

Flag carrier Philippine Airlines reported a lower profit in the first quarter ending June 30 on higher fuel expenses.

PAL said total comprehensive income reached $31.6 million during the peak months of April to June 2010, down 11 percent from $35.5 million year-on-year.

PAL registered a net comprehensive loss of $14.4 million in fiscal year ending March this year, down from $297.8 million in 2009, despite the first-quarter profit of $35.5 million.

Revenues in the first quarter rose 30 percent to $426.7 million from $327.7 million on year.

PAL Holdings Inc., the flag carrier’s parent company, told the Stock Exchange passenger and cargo volume grew 7 percent and 113 percent, respectively, while yields generated from passenger seat offerings rose 13 percent.

“The airline benefited from improvements in passenger traffic as well as cargo, reflecting signs of economic recovery worldwide,” PAL said.

Total expenses, however, climbed 37 percent to $391.6 million from $285.5 million last year, because of the increase in fuel costs.

Fuel expenses, which represent almost 40 percent of total operating cost, increased by $55 million as the average fuel price rose from $70.28 million in 2009 to $100.47 in 2010.

PAL Holdings said lower aircraft, component and engine repair expenses and cost-cutting measures stabilized operations.

The airline also reported a reduction in “other income” by $47.5 million to $15.4 million in the first three months this year from $62.9 million on year.

PAL president and chief operating officer Jaime Bautista said the flag carrier “remains focused on continuing efforts to generate more revenues and control costs.”

He added that PAL must “swallow bitter pills” and handle its labor issues with “utmost care” to enable the airline survive amid the cut-throat competition.

The impact of the flight cancellations on operations following the resignation of 26 pilots in early August will be reflected in the second quarter ending September.

Cabin crew and ground employees threatened to stage a strike over the retirement age, demand for salary increases and the planned spin-off of three non-core units affecting around 2,600 ground workers.

PAL Holdings reported a total comprehensive income of P1.63 billion in the quarter ending June 30, from P1.69 billion on year.