Manila Bulletin
August 19, 2011
By Emmie V. Abadilla
MANILA, Philippines — Soaring fuel prices, political turmoil in the Middle East and North Africa, along with natural calamities like Japan’s earthquake and tsunami, pulled Philippine Airlines (PAL) back in the red, losing US$10.6 million for the first quarter (April to June) of its current fiscal year 2011-2012.
The flag carrier was already in the black in the same period in 2010, earning US$31.6 million.
Overall, operating revenues improved by US$25.6 million or 6% to US$454.1 million for the period April to June 2011, PAL disclosed to the Securities and Exchange Commission.
However, while the airline reported a 9% improvement in passenger yields in its first quarter operations, sluggish demand resulted in a 7% decline in passenger traffic.
Operating expenses, on the other hand, escalated to US$464.7 million, up by US$71.3 million or 18% compared to the same period year.
Jet fuel costs alone, which is the airline’s biggest expense item amounted to US$210.8 million up by US$56.2 million or 36% from the year ago level of US$154.6 million.
Aviation fuel prices increased from an average of US$100.47 per barrel for the period April to June 2010 to USD 138.11 per barrel for the same period in 2011.
The International Air Transport Association (IATA), of which PAL is a member, expects a net industry margin of only 0.7% this year as rising jet fuel prices exert much pressure on the bottomline of its member airlines.
The ability of airlines to recoup this cost is critical to staying in the black this year and slower economic growth is making these challenges all the more difficult, according to the global association.
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