Phil. Stock Market Discussions, Comments and Forecast
FLAG CARRIER Philippine Airlines (PAL) said Friday it earned $28.2 million in the second quarter of its 2010-2011 fiscal year despite labor woes, but warned of uncertainties amid the resurgence of bird flu in Hong Kong, a major market.
The Lucio C. Tan-led airline did not give comparative profit figures. In a statement, PAL said revenues went up by a third to $399.5 million for the July to September period, from $299.7 million last year.
PAL President Jaime J. Bautista said that despite positive numbers in the last two quarters, the company remained “cautiously optimistic about the airline’s growth prospects.”
“The global airline industry remains vulnerable to volatile market conditions. Take fuel, for example. If the upward trend continues, it could wipe out all our recent gains,” he said in the statement.
“While there was a huge reduction in maintenance expenses by 36% as a result of the company’s cost savings initiatives, fuel costs have gone up as a result of higher jet fuel prices from an average of $79.06 per barrel for the quarter ended September 2009 to an average of $97.73 per barrel for the same quarter period in 2010. Fuel comprises approximately 40% of PAL’s total expenses,” he added.
Mr. Bautista also said the company was closely watching the re-emergence of the AH1N1 virus in Hong Kong. “The avian flu can dampen demand at a time when the Philippines has yet to fully recover from the stigma of the recent hostage crisis involving Hong Kong nationals and the negative travel advisory against the Philippines,” he said.
PAL said passenger volume went up by 26% while cargo increased by 57%.
Total expenses for the quarter reached $371.2 million, a 7% increase from $346.0 million last year.
“To remain viable, the flag carrier will focus on continuing its cost control initiatives as the passenger and cargo markets as well as fuel and maintenance costs remain very volatile,” Mr. Bautista said.
In its fiscal year that ended March, PAL reported a net comprehensive loss of $14.4 million.
Early this month, Malacañang said it was looking for short- and long-term solutions to the airline’s string of labor woes, after the Labor department’s affirmation of PAL’s plan to outsource three units which would result in the layoff of some 2,600 workers.
Economic managers last month submitted to the President a memorandum recommending full implementation of the civil aviation liberalization policy which could ease up the process for qualified foreign airlines wanting to expand operations in the Philippines, and put more pressure on PAL.
PAL will borrow an additional P2.5 billion to fund working capital next year, on top of the P2.5 billion needed to compensate workers to be affected by layoffs. — A. M. P. Dagcutan