Friday, August 29, 2008 PAL execs foresee more difficulties for RP airlines
PHILIPPINE Airlines (PAL) faces a slew of tough challenges in its operating environment over the short term as the flag carrier continues its build-up after graduating from receivership a year ago, the airline’s top two executives said yesterday.
“Once again, a pall of dark clouds hovers over our industry,” PAL chairman Lucio C. Tan and president Jaime J. Bautista warned in a joint letter to stockholders gathered for their annual meeting in Manila.
PAL had earlier announced a profit of $30.6 million for its financial year to March 31, 2008, its fourth consecutive annual surplus and first since successfully exiting receivership in September 2007.
But the outlook for the next 12 months was anything but rosy. Like they were in recent months, “sharp oil-price spikes will be a recurring challenge in the short to medium term,” Tan and Bautista said.
Both executives recounted the swift reversal of fortunes for carriers worldwide on account of the record-high increases in oil prices earlier this year.
“Until the recent tempest caused by the unprecedented upsurge in fuel prices, the airline industry appeared to be one of the best-performing businesses. A few weeks of sustained increases in fuel prices were all it took to show how shallow the reservoir of stability was,” they noted.
The implementation of an “open skies” regime among member states of the Association of Southeast Asian Nations in December 2008 was another looming challenge.
This would lead to a “potential increase in the number of carriers plying our regional routes, further intensifying competition,” Tan and Bautista cautioned.
Also, the downgrade of the Philippine civil aviation system to Category 2 by the United States had increased the severity of the hurdles we face, they said.
Under Category 2, Philippine carriers, like PAL, are barred from expanding services to the United States, preventing the airline from deploying its soon-to-be-acquired long-range flagship, the Boeing 777-300ER on the vital trans-Pacific routes. (PR)
