PAL earnings soar 10-fold to P5.8 B

The parent firm of flag carrier Philippine Airlines Inc. (PAL) managed to stay in the black in the first half of the year amid higher passenger volume with the launch of more routes.

PAL Holdings Inc. booked a net income of P5.86 billion in the first six months of the year, or more than 10-fold the P560.25 million net profit recorded in the same period last year.

The airline’s parent firm registered a 14.3 percent rise in revenues to P55.94 billion from January to June this year compared to P48.95 billion in the same period last year.

Passenger revenues grew 15 percent to P47.17 billion from P41.01 billion amid the 37 percent increase in passenger volume mainly for Americas, Australia, Japan, and Middle East routes.

The rise in the number of passengers was also traced to the interlining arrangement with PAL Express in the domestic sectors.

Other revenues include lease income arising from aircraft operating lease arrangements with an entity under common control, excess baggage revenues and ancillary revenues generated mainly from other passenger transport services.

PAL’s operating expenses went up 5.5 percent to P50.6 billion in the first half of the year from P47.97 billion in the same period last year due to higher expenses related to maintenance, passenger service, reservation and sales, general and administrative offset by the reduction in flying operations.

The airline’s maintenance costs jumped 47.7 percent to P5.55 billion from P3.76 billion, while flying operations declined slightly to P30.04 billion from P30.26 billion due to lower price of aviation fuel in the world market.

Fuel costs fell 21.3 percent in the first half of the year brought about by the decline in average jet fuel price per barrel to $88.37 this year from$ 129.71 last year.

Passenger service expenses went up 12.8 percent to P4.28 billion from P3.79 billion due to higher costs related to cabin crew benefits and passenger food due to increase in number of passengers as a result of increase in number of flights.

The additional nine A321s and seven A330 HGW to PAL’s fleet resulted to higher lease charges by P2.6 billion.

The Lucio Tan Group earlier decided to push back by four years the complete delivery of the remaining 38 aircraft from Airbus to 2024 instead of 2020 after successfully taking full control of the airline with the buyout of the stake of diversified conglomerate San Miguel Corp. (SMC).

It would be recalled that SMC through San Miguel Equity Investments Inc. (SMEII) bought a 49 percent stake in Trustmark Holdings Corp. in April 2012 for a total consideration of $500 million. Trustmark then owns 97.71 percent of PAL Holdings that has an 84.56 percent stake in PAL.

It embarked on an ambitious massive fleet renewal program involving the acquisition of 100 brand new aircraft with orders of 65 brand new Airbus aircraft worth close to $10 billion.

Immediately after buying back the shares of SMC in PAL last September, the Tan Group evaluated the fleet renewal program undertaken by the diversified conglomerate headed by president and chief operating officer Ramon Ang.