PAL trims losses to $40.2 million in 9 months of fiscal year

MANILA, Philippines - Flag carrier Philippine Airlines (PAL) trimmed its net loss to $40.2 million in the first nine months of its fiscal year ending March 2010, from the $330.2 million loss recorded in the same period a year earlier.

In filing with securities regulators, PAL attributed the loss to sagging revenues brought about by the global economic slowdown that continues to depress air traffic - an outcome consistent with the assessment of the International Air Transport Association (IATA).

IATA chief executive Giovanni Bisignani described 2009 as “the worst year the industry has ever seen,” losing 2.5 years of growth in passenger markets and 3.5 years of growth in the freight business. 

PAL registered total revenues of $1.08 billion from April to December 2009, down 15 percent, owing to the decline in both passenger and cargo revenues of 26 percent to $805 million and 14 percent to $73.5 million, respectively.

While PAL transported 7.02 million passengers during the period under review - an increase of 7.3 percent over the 6.54 million passengers carried a year earlier - revenue passenger kilometers (RPK), the industry yardstick for passenger sales volume, decreased 3.2 percent to 12.96 billion RPKs, indicating sluggish sales.

Passenger load factor was 73.91 percent, further sliding from the 76.12 percent recorded in the same span in 2008.

Total expenses amounted to $1.1 billion, a 30 percent decrease from the previous year’s $1.56 billion. This was due mainly to the major drop in fuel prices in the course of the year. Declining fair valuation losses on outstanding fuel deals also contributed to the reduction in overall expenses.

Despite the improvement in prices, fuel still accounts for the bulk of PAL’s operating expenses, making the carrier vulnerable to the volatile price swings of the commodity in the world market.

Fuel is only one of many serious challenges PAL faces going forward as airlines worldwide head into an uncertain economic environment.

“The industry starts 2010 with some enormous challenges. The worst is behind us but it is not time to celebrate. Adjusting to 2.5 to 3.5 years of lost growth means that airlines face another spartan year focused on matching capacity carefully to demand and controlling costs,” Bisignani said in a recent statement.