Higher PAL revenue capped by fuel costs

By Daxim Lucas
Philippine Daily Inquirer
First Posted 19:39:00 08/20/2010

PHILIPPINE AIRLINES reported Friday that it experienced a significant hike in revenue during the first quarter of its current fiscal year due to strong demand for travel during the summer months.
At the same time, however, the Lucio Tan-owned airline reported a comprehensive net income of $31.6 million for the same peak months of April to June 2010. The figure represents a decline of $3.9 million, or 11 percent, from that of the same period last year.

In a filing with the Securities and Exchange Commission, PAL reported revenue of $426.7 million for the first quarter of its April 2010 to March 2011 fiscal year—an improvement of $99 million, or 30 percent, over the $327.7 million reported during the same period the previous year.

Despite encouraging numbers brought on by the peak travel season, PAL president and COO Jaime Bautista said the airline would “brace for lower passenger volumes” during the traditional lean months of August to November.

During the current fiscal year’s first quarter, the airline benefited from improvements in passenger traffic and cargo volumes, reflecting signs of economic recovery worldwide.

Expenses amounted to $391.6 million—up by $106.1 million, or 37% percent, from the same quarter total of $285.5 million the previous year. Jet fuel costs, which continue to be the airline’s biggest operating expense, rose by $55 million during the first quarter, with fuel prices at an average of $100.47 per barrel from $70.28 per barrel in 2009.

The airline also reported a reduction in other income by $47.5 million to $15.4 million for the first three months this year compared with $62.9 million the year before.

Bautista said that while the aviation industry is showing signs of slow recovery, PAL remains focused on continuing efforts to generate more revenue and control costs.

Moving forward, PAL must “swallow bitter pills” and handle its labor issues with “utmost care” to survive a difficult and cut-throat operating environment, he said.