PAL narrows losses by 95% due to cost-cutting measures

First posted 19:36:22 (Mla time) July 23, 2010
Daxim Lucas
Philippine Daily Inquirer

FLAG CARRIER Philippine Airlines Friday reported a significantly improved financial standing at the end of its recently concluded fiscal year, where drastic cost-cutting measures reduced its losses by more than 95 percent.

In its filing with the Securities and Exchange Commission (SEC), PAL said its total comprehensive losses for the fiscal year that ended in March 2010 fell to only $14.3 million.
This marks a sharp decline from the comprehensive net loss of $297.8 million in the previous year, after the airline implemented cost reduction measures.

According to its SEC filing, PAL experienced weak passenger demand mainly in its international operations, as well as lower fares, which drove revenue down to $1.36 billion this year from $1.60 billion the year before.

“Worldwide capacity cuts during the year did not keep pace with declining traffic demand thus exerting significant pressure in pushing down fares and yields,” PAL said.

Due mainly to lower fuel prices, cost cutting and one-time gains recognized during the current period, PAL’s total expenses by the end of March 2010 dropped by 28 percent to $1. 35 billion.

The airline also recognized provisions for income taxes and fair valuation losses on outstanding fuel deals.

PAL said it was continuing to look for ways to improve its financial condition and the results of its operations. It has lined up and implemented various revenue enhancement programs, cash generation strategies and cost control initiatives, the airline stressed.

The International Air Transport Association (IATA) recently reported strengthening traffic demand. It expects airlines to post profits in 2010. However, it says the airline industry still has a long way to go to achieve sustainable profitability.