PAL expects to post profit in ’10

By Paolo Montecillo
Philippine Daily Inquirer
First Posted 09/30/2010

DESPITE THE strong headwinds in its path, flag carrier Philippine Airlines (PAL) expects to end 2010 with a profit, ending two years in the red, on the back of the recovery in demand for air travel.

PAL president and chief operating officer Jaime J. Bautista said various cost-cutting and revenue-enhancement measures implemented since the start of the year were also starting to bear fruit.

“We are very cautious and we will continue to implement programs to generate more revenue,” Bautista said at the sidelines of the annual shareholders meeting of PAL Holdings Inc., the airline’s parent firm.

“The outlook for PAL this year is that we will post a profit, but that will happen only if we can successfully implement our ‘survival plan,’” he told reporters.

PAL’s survival plan is a set of measures intended to help the company cut costs and improve revenue. This was formulated after PAL lost about $300 million over the last two years.

These measures include a more aggressive marketing program to attract more passengers and outsourcing of non-core services such as in-flight catering and airport services.

The outsourcing will affect about 2,600 of PAL’s 7,000 employees.

The outsourcing of non-core services, Bautista said, would also be needed if PAL was to attract investors who would pour in fresh money to revitalize the airline.

The Lucio Tan group, which owns about 90 percent of PAL, is now keener on growing its budget carrier Air Philippines, operating under the brand Air Phil Express. The group is investing $250 million in the expansion of Air Philippines.