Nov 152013

MANILA, Philippines – Losses of listed PAL Holdings Inc. – parent firm of national flag carrier Philippine Airlines Inc. (PAL) – ballooned in the first half of its fiscal year 2013 ending September due to lower passenger revenues.

In a submission to the Philippine Stock Exchange (PSE), PAL Holdings reported that losses reached P2.19 billion in the first half of the year ending September compared to P121.79 million in the same period last year.

The holding firm reported that revenues fell 5.9 percent to P36.57 billion compared to P38.86 billion as passenger revenues dropped 7.7 percent to P29.8 billion while cargo revenues remained steady at P2.7 billion.

“The decrease was attributable mainly to the unfavorable passenger revenue performance during the period as a result of lower passenger yields as well as the drop in volume of traffic flown,” PAL Holdings said.

PAL said it mounted less flights from April to September as it restructured its operations by transferring the bulk of its domestic flights to sister firm PAL Express to focus on international operations.

PAL recognized P1.48 billion in other income due to a foreign exchange gain as a result of the revaluation of the retirement liability account balances denominated in peso that strengthened against other currencies particularly the US dollar as well as the result of PAL’s adoption of the amendments to Philippine Accounting Standards (PAS).

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Expenses of PAL Holdings were almost unchanged at P38.77 billion in end-September amid higher costs for flying operations, maintenance, passenger service, reservation and sales as well as general and administrative expenses.

“Other income recognized in the current period as well as lower expenses related to aircraft and traffic servicing contributed to the decrease in expenses, countered by the increase in flying operations, maintenance, passenger service, reservation and sales, general and administrative expense, and financing charges,” it added.

Fuel costs remained PAL’s biggest operating expense but retreated by 4.1 percent to P15.68 billion as the average jet fuel prices declined to $126.89 per barrel from $129.70.

For the second quarter ending September alone, PAL Holdings booked a net loss of P1.11 billion or almost double the net loss of P616.38 million in the same quarter last year while revenues remained steady at P18.04 billion from P18.07 billion.

PAL, jointly owned by taipan Lucio Tan and diversified conglomerate San Miguel Corp. (SMC), is in the middle of a fleet modernization program aimed at reducing maintenance costs and other expenses with the acquisition of fuel-efficient brand new aircraft.

PAL now operates a fleet of 48 aircraft composed of 10 Airbus 330-300, 12 A320-200, eight 340-300, five A321-231, four A319-100 five Boeing 777-300ER and four 747-400.

Since the entry of SMC in April last year, PAL embarked on ambitious refleeting program. It entered into a $7 billion deal with Toulouse-based EADS in August last year to acquire 55 new Airbus aircraft consisting of 45 single-aisle A321 and 10 wide-body A330 aircraft. This was regarded as the largest aircraft purchase in Philippine history.