PAL is back in the black
MANILA, Philippines – Businessman Ramon S. Ang has made good on his promise to bring national flag carrier Philippine Airlines Incorporated (PAL) back in the black.
Ang, who is president and chief operation officer of both PAL and diversified conglomerate San Miguel Corporation (SMC), committed to bring the national flag carrier – jointly owned by taipan Lucio Tan and SMC – back in the black with an ambitious fleet renewal program aimed at acquiring 100 brand new aircraft with an initial order for 65 Airbus aircraft worth $9.5 billion.
The previous quarter’s growth is reported amid talks of a move to buyback SMC’s 49% stake in PAL by the Tan group.
Favorable passenger revenues
In a report to the Philippine Stock Exchange (PSE), PAL’s parent firm PAL Holdings Inc reported a net income of P1.49 billion ($34.13 million*) in the second quarter of 2014, reversing a net loss of P1.08 billion ($24.74 million) in the same quarter last year.
Revenues jumped 47.4% to P27.3 billion ($625.50 million) from April to June this year compared to P18.52 billion ($424.33 million) in the same period last year as passenger revenues surged 51% while cargo revenues grew 33%.
Passenger revenues amounted to P16.33 billion ($374.16 million) in the second quarter this year or P4.92 billion ($112.73 million) higher than the P11.4 billion ($261.13 million) booked in the same quarter last year following the launch of new international routes.
“The increase was attributable mainly to the favorable passenger revenue performance during the quarter. This was brought about mainly by the introduction of new routes such as London, Abu Dhabi, Dammam, Riyadh, Canton, and Haneda, Japan,” PAL said in a disclosure.
The airline’s expenses increased 31% to P25.52 billion ($584.56 million) from P19.47 billion ($445.91 million) largely on account of higher expenses related to flying operations, aircraft and traffic servicing, passenger service, reservation and sales, and general and administrative expenses.
Expenses from flying operations rose to P16.33 billion ($374 million) from P11.41 billion ($261.38 million) due to higher fuel consumption with the introduction of new long haul routes; the upward movement in fuel to $128.55 per barrel from $126.68 per barrel; higher aircraft lease charges with the acquisition of 16 Airbus aircraft and a Boeing aircraft; and higher cockpit crew cost due to more international flights.
Maintenance cost fell 21.1% to P1.94 billion ($44.44 million) from P2.46 billion ($56.34 million) with the use of brand new and fuel efficient aircraft.
As a result, PAL booked a comprehensive income of P1.44 billion ($32.98 million) in end-June from a comprehensive net loss of P499.8 million ($11.45 million) in end-June last year.
Also, the change in the airline’s accounting period to calendar year ending December 31 from fiscal year ending March 31 took effect this year.
As such, the company booked a net income of P560.11 million ($12.83 million) for the 6 months ending June this year compared to a net loss of P1.08 billion ($2.47 million) for the 3 months ending March 31 last year.
Revenues for the period amounted to P41.01 billion ($939.20 million) compared to P18.52 billion ($423.98 million) during the 3-month period last year while expenses reached P47.97 billion ($1.10 billion) versus P19.47 billion ($445.86 million).
In April 2012, San Miguel’s wholly-owned subsidiary San Miguel Equity Investments Inc acquired 49% equity interest in Trustmark Holdings Corporation for $500 million. Trustmark owns 97.71% of PAL Holdings Inc, which in turn owns 84.67% of PAL through PR Holdings Inc.
The report also said that after the acquisition, the LT Group would likely take in Abu Dhabi-based Etihad Airways as partner. In April, the airlines signed an agreement covering codeshare flights, loyalty programs, airport lounges, joint sales, and marketing programs to provide better services at their Abu Dhabi and Manila hubs.
The group of businessman Manuel V. Pangilinan and Ayala Corporation said they are not interested in PAL amid reports its major shareholders are in sale talks. – Rappler.com
*($1 = P43.67)