PAL Holdings turns around, posts P2.44-B profit in April-September

The Philippine Star
November 24, 2010
By Zinnia B. Dela Peña

MANILA, Philippines - PAL Holdings Inc., the publicly-listed parent firm of flag carrier Philippine Airlines, posted a net income of P2.44 billion in the six months ending September this year, a reversal of the P177.63-million loss incurred in the same period last year.

The significant turnaround was attributed mainly to higher passenger and cargo revenues, which grew 16.4 percent and 80.5 percent, respectively.

Revenues amounted to P37.52 billion in the first half of its fiscal year ending March 2011, up 24.6 percent from the P30.12 billion recorded a year ago.

A 13.4-percent improvement in yields generated from passenger seat offerings complemented the boost in passenger traffic.

Total expenses and other charges from April to September 2010 rose 14 percent to P34.6 billion, largely due to higher costs related to flying operations, aircraft and traffic servicing, reservation and sales, and other expenses which offset the decrease in maintenance, financing charges and general and administrative costs.

Flying operations expenses grew 21 percent due to higher fuel costs and aircraft lease rentals. Fuel price per barrel went up from $ 79.06 in 2009 to $ 97.73 this year. The phase-in of two Boeing 777 aircraft in November 2009 and January 2010 likewise resulted in the increase of aircraft lease rentals by 45.7 percent.

More international flights were operated, thus resulting in higher aircraft and traffic servicing cost by two percent or P89.7 million over the previous year’s.

Debt servicing of various long term obligations resulted in lower financing charges of P602.5 million or a reduction of 39 percent.

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

PAL posted a net profit of $28.2 million in the second quarter of its fiscal year (July-September 2010) on the back of a 33 percent jump in revenues.

As of end-September this year, PAL Holdings had total assets of P71.95 billion, down six percent from the March 31, 2010 balance of P76,76 billion.

Total liabilities likewise decreased 11 percent due to the principal payments made on various loans and the effect of the debt buyback of certain unsecured claims from Trustmark Holdings Corp.

To remain viable, PAL will focus on continuing its cost-control initiatives as the passenger and cargo markets as well as fuel and maintenance costs remain very volatile.