Philippine Airlines Likely To Post Profit In Q3


philippine-airlines

PHILIPPINE Airlines (PAL) of tycoon Lucio C. Tan likely turned in a profit in the third quarter of the year on lower fuel costs and higher passenger volumes, a company official said yesterday.

On the sidelines of the company’s stockholders’ meeting in Manila, PAL Holdings, Inc. President Jaime J. Bautista told reporters the company was in the black for the months of July and August, but noted that the “expectation is not too good for September,” typically a lean month for the airline industry.

“We’re expecting the third quarter will still be a good quarter for PAL and PAL Holdings,” Mr. Bautista said, referring to its earnings in the July to September period.

PAL Holdings, whose net income comes mostly from Philippine Airlines, incurred a net loss of P322.157 million in the quarter ending September last year, according to its financial statement.

In the first half, PAL Holdings’ earnings surged more than 10 times to P5.85 billion from a year earlier on strong passenger revenues. It returned to black in 2014 after posting three straight years of losses amid labor unrest, mounting expenses, a weak peso and heightened competition.

This year, the airline is getting a boost from the slump in fuel costs, which used to account for 40-50% of total cost of operations.

“Now, it’s down to 30% so that’s a huge contribution, but we’ve also reduced fares so we passed on the savings to the passengers,” Mr. Bautista said.

PAL expects to fly 12 million passengers this year, up from the over 9 million in 2014, Mr. Bautista said, noting that the tally reached 6 million passengers in the first six months of the year.

“We’re on track in terms of the number of passengers,” he said.

On the impact of the Chinese yuan’s devaluation, Mr. Bautista shrugged off its impact on the company because “we report [our financial statement] in US dollars,” but it may have an effect on travelers who earn in Philippine peso.

“It reduces the purchasing power of those earning pesos. Their appetite to travel will be reduced because it becomes more expensive for peso earners to travel if they pay in US dollars,” he said.

After taking a hit due to geopolitical tensions, PAL sees a recovery in Chinese passengers next year when it starts offering new routes in the world’s second-largest economy.

“We are very optimistic next year will be a good year for Philippines for Chinese tourists,” Mr. Bautista said.

Next year, PAL is taking delivery of five Airbus 321 and two Boeing 777-300 that will bring down the average of its fleet to 3.6 years.

PAL is targeting to make a recommendation this year to its board of directors on whether it will buy Boeing 787 or Airbus 350 to further boost its 76-strong fleet that is currently dominated by Airbus.

“We’re looking at eight over 2-3 years. For long haul, Europe and US These airplanes will replace the Airbus 340s. We can sell them.

There’s still a market for that airplane,” Mr. Bautista said.

Source: Krista Angela M. Montealegre, Senior Reporter, http://www.bworldonline.com

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