PAL airs caution amid recovery

By Paolo Montecillo
Philippine Daily Inquirer
First Posted 22:30:00 11/21/2010

MANILA, Philippines—Flag carrier Philippine Airlines (PAL) posted a profit for the second quarter of its fiscal year as revenues climbed by a third on the back of the revival in demand for domestic and international air travel.

In a statement over the weekend, PAL reported a $28.2-million net income for the July-September period. This came as revenues in the same period shot up by 33 percent to $399.5 million from $288.7 million in 2009.

PAL’s “modest” gains came amid uncertainties spawned by a looming fuel price hike and a new case of bird flu in Hong Kong, the airline said in a statement.

In its filing with the Securities and Exchange Commission, PAL reported revenues of $399.5 million for the second quarter of fiscal year 2010-11, up by 33 percent from the same period total of $299.7 million in 2009.

PAL also reported increases in both passenger (26 percent) and cargo (57 percent) revenues from its international operations, with an improvement as well in yields generated from passenger seat offerings.

This offset the growth in total expenses during the quarter, which reached $371.2 million, or 7 percent, higher from $346.0 million in the same period last year.

The company said cost-saving measures, which led to a 36-percent dip in maintenance expenses, helped temper the increase in fuel prices from an average of $79 last year to $97 this year. Fuel makes up roughly 40 percent of the company’s expenses.

Despite the encouraging signs, PAL president and chief operating officer Jaime Bautista said the company remained “cautiously optimistic” of the airline’s prospects.

He said recent reports of a possible breakout of the AH1N1 virus in Hong Kong and the recent hostage crisis involving foreign tourists might dampen demand for travel to the Philippines.

“The global airline industry remains vulnerable to volatile market conditions. Take fuel, for example. If the upward trend continues, it could wipe out all our recent gains,” Bautista said.

The recent negative travel advisories on the Philippines might also lead to a dip in demand, Bautsita said.