PAL profit tumbles on price pressures
PAL profit tumbles on price pressures
MANILA, Philippines — Flag carrier Philippine Airlines (PAL) felt the shock of ballooning prices of fuel and services in the first quarter of the year, suffering a 13- percent drop in profit due to higher spending.
PAL’s parent PAL Holdings Inc. yesterday said it faced a multitude of challenges in the first quarter that pulled its net income to P3.92 billion from P4.51 billion a year ago.
PAL spent more for every item in the operations, from flying and maintenance costs, to aircraft and passenger servicing, increasing expenses by 13 percent to P39.07 billion.
In spite of this, PAL gained from the sustained recovery of air travel here and abroad. The airline grew its revenue by nine percent to P45.8 billion from January and March, from P42.21 billion a year ago, driven by the growth in passenger income.
The flag carrier owned by taipan Lucio Tan improved its passenger revenues by seven percent to P40.35 billion during the period. PAL deployed more than 28,000 flights that ferried a total of 3.8 million travelers.
PAL president and chief operating officer Stanley Ng said he is confident, the airline would withstand new challenges coming its way, optimistic that its strategy to expand its fleet and network will bear fruits.
“Our positive bottom line confirms that we are on track with our growth strategies in the areas of fleet growth, route network expansion and service innovations,” Ng said.
“However, supply chain issues remain and continue to put a strain on our operations, but we are determined to address these challenges,” he added.
PAL burned 16 percent, or $73 million, of its capital expenditures in the first quarter to settle the pre-delivery requirements for its firm order for nine Airbus A350-1000s. The airline also took in a Boeing 777-300ER in March through a lease.
For the year, PAL expects to spend as much as $450 million for capex, allocating 80 percent of it for aircraft upgrade. The airline will refurbish 18 of its A321ceos to equip them with new seats and enhance their in-flight entertainment.
In October, PAL will mount direct flights from Manila to Seattle, introducing its sixth route in the US and eighth in North America and solidifying its grip on the Philippine demand for US trips.
Recently, PAL has received regulatory approval to raise its capital stock to P30 billion to free up space for new investments for its expansion plans.