Thursday, October 30, 2008 PAL: ‘Numbers are back’
PHILIPPINE Airlines (PAL) is seeing an improvement in its business after the threat of global financial turmoil, brought by the US sub-prime mortgage crisis, weakened investor sentiment and pushed oil prices down.
“What’s happening now in the industry is passenger numbers are going back to normal (after fuel prices went back down),” said Jaime Bautista, president of the flag carrier, on the sidelines of the launching of the Mabuhay Miles Platinum Mastercard last week at Casino Español.
He said he was referring to passengers on “local, regional and international” routes.
“Our load factor is getting better. It is now around 75 percent,” he told Sun.Star Cebu.
Last July, strong demand for gasoline and diesel, combined with concerns about refiners’ ability to keep up and tensions over Iranian missile tests, conspired to push crude oil prices on the New York Mercantile Exchange (Nymex) to a record high of $147.27 a barrel.
Deflated
But the financial crisis that wiped out investment bank Lehman Brothers and insurance giant American International Group and forced the world’s central banks to slash interest rates earlier this month has since deflated both investor and consumer sentiment.
Crude oil prices at the Nymex are now trading below $70 a barrel on recession fears.
The drop in oil prices prompted PAL to cut fuel surcharges last week.
Despite the global recession fears, however, Bautista said there are no plans of canceling any routes. In fact, PAL is still targeting an increase in passenger numbers this year.
“Last year, we carried a little over seven million passengers,” he told Sun.Star Cebu. “The target this year is eight million passengers, of which 30 percent are domestic and 70 percent are international.”
Asked to comment on arch rival Cebu Pacific’s claims that it is now dominating the domestic passenger market, Bautista said, “Now we’re doing 50-50,” meaning PAL and Cebu Pacific each have 50 percent of the market in the domestic routes.
Bautista said PAL intends to weather the financial crisis by offering better prices and better service.
“Our on-time performance is getting better. It’s now at 95 percent,” he said.
PAL’s net profit plunged 76 percent to $30.6 million in its fiscal year ending March 31, 2008 after oil prices soared. (CTL)
