PAL Holdings H1 profit boosted by traffic hike

But carrier’s prospects still ‘challenging’

By Paolo Montecillo
Philippine Daily Inquirer
First Posted 21:13:00 11/29/2010

MANILA, Philippines—Lucio Tan-led Philippine Airlines (PAL) Holdings grew its profits substantially in the first six months of its fiscal year on the back of the improvement in demand, despite the many challenges faced by the local aviation sector over the past few months.

In a disclosure, the listed firm said its consolidated net income for the March to September period reached P2.34 billion. This represents a 349-percent increase from the figure reported in same period last year.

Consolidated revenues for the period amounted to P37.5 billion, up by 25 percent from last year’s P30.1 billion.

“The increase in revenues was attributable mainly to higher passenger and cargo revenues earned during the period,” the company said.

Its main subsidiary, flag carrier PAL, experienced a 16.4- and 80.5-percent growth in its passenger and cargo traffic, respectively, over the same period the year before, “reflecting an upturn in global economy.”

An improvement of 13.4 percent in yields generated from passenger seat offerings complemented the increase in passenger traffic.

Total expenses and other charges for the period April-September rose by 14 percent over the previous year’s same-period total of P30.3 billion.

This was primarily due to higher expenses related to flying operations, aircraft and traffic servicing, reservation and sales and other expenses, offset by the decrease in maintenance, financing charges and general and administrative costs.

Flying operations expenses, which increased by 21 percent, is attributable mainly to higher fuel costs and aircraft lease rentals. About 40 percent of its operating expenses represent jet fuel consumption.

More international flights were operated during the period, resulting in higher aircraft and traffic servicing costs by 2 percent, or P89.7 million, over the previous year’s level of P 4.5 billion.

Cost-cutting measures implemented by PAL resulted in the reduction of general and administrative expenses by 22 percent, or P376.5 million.