PAL Returns To Profitability With $11.4 Million In FY Quarter

Manila Bulletin
August 31, 2012
By EMMIE V. ABADILLA

Philippine Airlines (PAL) is back in the black, netting US$11.4 million earnings for its fiscal first quarter ending June, 2012, from a net loss of US$10.6 millio in the comparative period and is now planning to build a new airport of its own in a 2,000 hectare area 15 minutes away from Makati next year.

PAL President Ramon S. Ang made the announcement in a presscon after yesterday’s stockholders’ meeting at the Century Park Hotel, Manila.

Earlier, the airline’s holding company, PAL Holdings, also reported making gains in the fiscal first quarter ending June amounting to R489.2 million  from a net loss of R475.1 million posted the previous year.

PAL incurred a net loss of US$99.79 million for its 2011-2012 fiscal year, citing labor disturbance, the Japan tsunami and volatile fuel prices amidst civil strife in the Middle East.

PAL’s total comprehensive loss of US$99.79 million in the past 12 months to March 31, 2012 was a “stark reversal” from the US$72.52 million comprehensive income the year before, Chairman Lucio C. Tan conceded.

Operational revenues actually increased marginally by 2.6% to $1.72 billion as the airline carried 8.22 million passengers,down from the previous year but still strong enough to translate to better revenues, he noted.

However, uncontrollable external factors combined to jack up operational expenses by 14.6% to $1.84 billion, wiping out the modest gains and squeezing PAL financially.

Fuel was again the major culprit, with the average price shooting up to $128.37 per barrel, 30% higher than the year before, due to the turmoil in the Middle East.  As a result, fuel made up 43.8% of PAL’s operating expenses, up from 39.6% previously.

But now, the flag carrier has put the difficulties of the past year behind. Since new investors came in PAL this April, the airline gained stability, increasing its yield, load factors and cargo volumes and improving its maintainance.

In his report to shareholders, Tan said investments are being made to put PAL firmly on the path to future growth. For his part, the PAL president stressed that the airline’s fleet modernization program can sustain the positive results that was achieved by the airline for the fiscal first three months.

“Despite multiple challenges last year, PAL stayed the course and dramatically restructured its operations, enabling your airline to attract much-needed strategic investments and prime itself for Sustained push in the years ahead,” according to Tan.

Next year, by January or February, Ang will present PAL’s plan for a new air terminal and 4 runways to President Benigno Aquino III for his approval and to ensure that the project will be aligned to the head of state’s masterplan for Philippine tourism.

While he declined to give details on the project cost and location, the PAL President says it will be easy to find financing for the proposed terminal with just USD$500 Million equity. He is already in discussion with investors.

PAL can start construction of the new terminal in 2013, as soon as the President approves the project and plans to hire Korean contractors.”We can finish the terminal in three years.”