Local airlines see better profit picture in Q4

Local carriers are expecting a better fourth quarter after a weak performance in the third quarter due to soaring fuel prices.

Officials from flag-carrier Philippine Airlines (PAL) and budget carriers Cebu Pacific and AirAsia Philippines said their respective companies are expecting a better performance in the fourth quarter following net losses recorded in the third quarter.

“We see the peso getting stronger and fuel prices declining in the fourth quarter, so that will definitely help our bottomline – not just ourselves, but also the other airlines. Hopefully we will be able to do something positive in the fourth quarter,” Cebu Pacific vice president for commercial planning Alexander Lao said.

“The fourth quarter is normally better than the third quarter, seasonality wise. Third quarter is not a good season for the airlines,” he said, adding that the seasonality factor was further aggravated by the increase in fuel costs this year.

Cebu Air Inc., operator of Cebu Pacific, reported a P518.4 million net loss in the third quarter from a P42-million profit in the same period last year. The decline was attributed mainly to fuel prices coupled with the weakness of the peso against the dollar.

PAL vice president Jose Perez De Tagle, meanwhile, said the country’s flag carrier is looking to further trim losses in the fourth quarter.

In the third quarter, PAL Holdings incurred a net loss of P2.52 billion, lower than the P2.96 billion reported in the same period last year.

“We still see that the market is growing. Our revenues are increasing. Nonetheless, we still expect growth and we expect that to continue in the next few months,” Tagle said.

AirAsia Philippines, for its part, is looking to end the year with a flat income growth, with a recovery seen in the fourth quarter, according to its chief executive officer Dexter Comendador.

“We will recover this fourth quarter. It would be a lot better because we expect the fuel to continue to go down or stay this low for the next year,” Comendador said.

AirAsia Philippines incurred net operating losses of P1.49 billion in the third quarter, resulting mainly from the closure of Boracay Island.

PAL and Cebu Pacific officials said the government’s move to allow airlines to impose fuel surcharge in domestic and international flights would help in their recovery as it would lessen the impact of soaring fuel costs in their operations.

“It helps us to recover. It helps the airlines recover some of the fuel costs, but as you know, what was finally approved was not full recovery of the cost, it’s just a partial, an alleviation that helps us a bit, unlike before we have no direct recovery. So anything helps,” Tagle said.