PAL may sell Bacolod property to pay debts and fund capex

Monday, 10 January 2011 20:25   Lenie Lectura / Reporter

BELEAGUERED Philippine Airlines (PAL) may yet again resort to selling another piece of property to partly repay debts and to fund working capital.

“We still have a property in Bacolod where the airport is situated. We own part of the airport. If there will be opportunities to sell and make money out of it then we will consider,” PAL president Jaime Bautista said yesterday.

PAL raised $12 million from the sale of its property in Makati City last year. This one-time gain was included in the airline’s $31.5- million profit ending June last year, said Bautista.

PAL is paying off $10 million in debts every month and about $46 million which comes due every sixth month of the year. Bautista said the flag carrier is sourcing payment from internally generated cash as well as savings from various cost-cutting measures.

Fuel remains to be one of the biggest expenses of the airline company with an annual payment of an estimated $570 million for fuel alone. “Early last year, a barrel of crude costs about $80 but when the year ended it already costs $90. For every $1 increase, this translates to $55 million in operational cost for us,” explained Bautista.

The PAL chief said in the third quarter ending December last year the airline will be reporting the same or slightly higher profits compared with the previous year ago, thanks to higher revenues.

PAL is projecting $1.5 billion in total revenues for the fiscal year ending March this year. Bautista said PAL is on track to meet that number.

“Our revenues for December 2010 alone were up by $5 million. December is one of our most profitable months. We haven’t finalized yet our profit because December just ended but it is closer to our projections. Traffic worldwide has recovered,” added Bautista.

“February is a losing month again. But in spite of our projection, we will continue to pay our debts, operational costs and labor expenses which totals around $225 million a year,” said Bautista.

Amid labor woes, PAL registered a 10-percent increase in flight bookings in December compared with the same period last year.

Based on sales data, almost all flights coming from the US are full, registering the highest number of forward bookings, followed by those coming from Australia. PAL’s traditionally packed flights every December are those from North America, Australia, Hong Kong and Singapore.?

Between Christmas and New Year, PAL’s airplanes are filled with vacationers bound for Kalibo, Hong Kong, Bangkok, Singapore and China.