PAL sees flat growth in 1st 9 months

Flag carrier Philippine Airlines (PAL) expects its net income to be flat or just slightly higher in the first nine months of its current fiscal year due primarily to the high cost of aviation fuel.

PAL president Jaime Bautista said while the company’s revenues were up, cost likewise increased. "We expect net income to be the same or slightly higher," he revealed.

The carrier, around 81 percent of which is owned by business tycoon Lucio Tan and his associates, posted a P1.2 billion net income for its fiscal year ending March this year, a reversal from the loss of P643 million registered in 2004.

"Initially we were projecting our net income to be higher than last year. But with the current increase in fuel cost, we expect to maintain our last year’s performance," Bautista explained.

PAL’s operating revenues during the April 2005 to March 2006 period rose 22 percent year-on-year to P53.9 billion from P44 billion due to higher yield per revenue passenger kilometer, increase in the number of passengers carried, as well as higher foreign exchange rate.

Revenue from passengers rose to P4.5 billion from P35.8 billion while revenue from cargo reached P5.1 billion from a year-ago level of P4.7 billion.

Total operating expenses grew 12 percent due to higher fuel cost, reaching P51.9 billion, up 16 percent from P44.7 billion. Fuel cost surged 38 percent to P13.5 billion over last year’s P9.7 billion due to continued increase in the prices of jet fuel.

Bautista disclosed that the biggest loss for the current fiscal year was incurred during the October to November 2006 period due to the higher fuel cost as well the two months are its traditional lean months, while December is the most profitable month for PAL.

PAL has embarked on a $2.3-billion expansion program involving the acquisition and lease of new planes for both its international and domestic operations.

As part of its $1.5 billion fleet expansion program, the company signed a purchase agreement with the Boeing Co. covering a firm order for two B777-300ER jets and purchase rights for two additional units.

Another $840 million is being spent for the refleeting of PAL’s single aisle fleet used for domestic and Asian operations.

Each B777 jet is estimated to cost around $250 million. PAL has also signed a letter of intent with GE Commercial Aviation Services for the lease of two were B777-300ER.

Bautista said the acquisition of the two B777-300ER will allow the carrier to expand direct services between the Philippines and the United States. "Our passengers will also benefit from the higher level of comfort and amenities that this high-technology aircraft brings," he added.

In addition to flying to more areas in the US such as San Diego and Seattle, PAL is also looking at revisiting the Middle East as well as Europe. The new planes can likewise be used for flights to Australia and Japan. On Dec. 16, PAL will unveil its flights to Nagoya, its fifth destination in Japan.