PAL plunges into net loss in H1

MANILA, Philippines — Flag carrier Philippines Airlines (PAL) had its wings clipped by rising prices in the first half, as it incurred a net loss of $25.1 million due to a double-digit increase in fuel costs.

Based on its financial report, PAL’s parent PAL Holdings Inc. booked a net loss in the six months to June, swinging from a profit of $136.7 million a year ago.

PAL was able to keep its revenue in growth mode, climbing by six percent to $1.75 billion, as its passenger and cargo segments held on in spite of inflationary pressures.

However, gains were affected by the 48-percent increase in fuel costs to $674.5 million, as the geopolitical conflict in the Middle East pushed up prices. In April, jet fuel prices ballooned above $200 per barrel, forcing carriers to reduce flight operations.

PAL’s fuel costs have accounted for 39 percent of its expenses as of June, from 30 percent a year ago. Given this, PAL adjusted flight schedules to domestic and Middle East destinations, relying heavily on transpacific services for now.

PAL also saw travelers trim discretionary travel during the period, as it recorded a three-percent dip in passengers flown to 8.2 million, easing load factor to 78.9 percent.

Still, PAL’s passenger revenues went up by five percent to $1.47 billion, while cargo income rose by 30 percent to $98.2 million, thanks to fare adjustments to cover the cost spikes.

PAL president Richard Nuttall said the airline would still be monitoring the Middle East conflict given the frailty of the situation, understanding that any escalation could bloat fuel prices.

“Our first half performance demonstrates PAL’s underlying resilience. We moved quickly on fare and network adjustments, protected our liquidity and continued investing in the fleet and on our partnerships that will strengthen our long-term competitiveness,” Nuttall said.

If there is one thing the airline is confident about, it is its strength on transpacific services. It will be launching direct flights to Chicago by November, adding a new US destination that improves its competitive advantage against new entrants.