PAL losses in 2009 down to $14.3-M

First posted 08:12:23 (Mla time) July 25, 2010
INQUIRER.net

MANILA, Philippines—Citing lingering weak demand especially in international flights, Philippine Airlines (PAL) reported $14.3 million in total comprehensive losses for its fiscal year ending March 2010.

Though still substantial, PAL said its current losses are significantly lower than the $297.8-million losses it incurred during the previous fiscal year.

In a news release over the weekend, PAL said capacity cuts by global airlines did not match the decline in passenger traffic, thus exerting pressure on yields. Lower fares also contributed to the reduction of PAL's revenues to $1.36 billion compared to the $1.6 billion the year before, as indicated in its latest financial statement submitted before the Securities and Exchange Commission.

The flag carrier said that through prudent handling of resources, its total expenses dropped to $1.35 billion, or $511.4 million less than the previous year's figure of $1.86 billion. Also a major contributing factor in the airline's reduced expenses is the huge drop in fuel prices to an average of $ 86.94 per barrel, compared to the average of $123.80 per barrel the year before.

Apart from lower expenses, PAL also recognized "Other Income" of $102.5 million as a result of fair valuation changes on outstanding fuel deals and a “one-time gain” from a debt buyback of certain unsecured claims.

Moving forward, PAL said it will strive to improve its financial condition and results of operations. It has lined up and implemented various revenue enhancement programs, cash generation strategies and cost control initiatives, which includes the planned spin-off of three non-core units, the airline stressed.

While the International Air Transport Association (IATA) noted strengthening traffic demand and expects airlines to post profits in 2010, it says that the industry is still a long way from sustainable profitability.