PAL earnings cut to $31.6M in Q1; airline vows to swallow ‘bitter pills’

Philippine Airlines (PAL) earned $31.6 million for the peak months April to June due to higher demand for travel during summer, although the figure was down by $3.9 million or 11% from the same period last year.

The Lucio C. Tan-led airline said it would continue cost-cutting measures and swallow "bitter pills" amid tight competition in the aviation sector.

The flag carrier said in a disclosure to the Philippine Stock Exchange (PSE) it posted revenues of $426.7 million for the first quarter of its fiscal year 2010-2011, up by 30% over last year’s $ 327.7 million. "Despite encouraging numbers on account of the peak travel season, PAL is bracing for lower passenger volumes during the airline’s ’lean season’ usually between August to November," said PAL President Jaime J. Bautista.

PAL said it benefited from improvements in passenger traffic as well as cargo volumes, reflecting economic recovery worldwide. Higher yields per seat also complemented growth, it added.

The company reported total expenses of $391.6 million, up by $106.1 million or 37% from $ 285.5 million last year. "Jet fuel, which continues to be the airline’s biggest operating expense, rose by $55 million during the first quarter with fuel prices at an average of $100.47 per barrel from $70.28 per barrel in 2009," PAL said.

The airline also reported a decrease in other income, by $47.5 million to $15.4 million from $62.9 million last year.

"While the aviation industry is showing signs of slow recovery, PAL remains focused on continuing efforts to generate more revenues and control costs. Moving forward, PAL must swallow bitter pills and handle its labor issues with utmost care to survive amidst the difficult and cut-throat operating environment," said Mr. Bautista.

Early this month, the carrier said none of the 26 pilots who left their posts late last month had returned, and that court cases were being prepared against them. The mass resignation of pilots forced the airline to cancel and merge flights.

PAL’s flight attendants and stewards, meanwhile, have declined to accept an P80-million compensation package being offered by management in collective bargaining talks, and are threatening to strike.

A separate group of ground workers have also threatened to strike over the Labor department’s decision to uphold PAL’s plan to outsource catering, ground, and call center services. In April, the Labor department assumed jurisdiction over PAL’s dispute with the PAL Employees’ Association or PALEA to prevent a strike.

PAL claims it lost almost $320 million or over P15 billion in the last two fiscal years due to the global economic crisis and higher fuel prices, the downgrade of the Philippines’ aviation safety rating by the US Federal Aviation Administration, and the European blacklisting of all Philippine carriers. -- A. M. P. Dagcutan

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