Thursday, November 20, 2008 PAL reports $114M loss
MANILA - Philippine Airlines (PAL) reported a loss of $113.8 million for the first six months of the fiscal year due to a surge in fuel prices, the national flag carrier announced yesterday.
It said the rise in fuel prices came during the second quarter of the fiscal year, which ends March 31, 2009.
Its profit of $45.8 million during the first quarter, was overshadowed by relentless increases in fuel costs in the following quarter, which more than erased all its gains, the airline said in a statement.
“The near-doubling of the average price of aviation fuel from $83.73 a barrel in July-to-September 2007 to $157.03 in the same period in 2008 impacted heavily on PAL’s expenses and, ultimately, on its bottom line,” the statement said.
Revenues for the first half rose 16.5 percent to $848.7 million as the number of passengers rose 11.2 percent to 4.19 million, it added.
The airline reported a net profit of $30.6 million for the financial year ending March 31, 2008, down from $130.5 million the previous year.
Its total expenses for the first half ballooned by 37.3 percent from a year ago, to $971.8 million. Fuel led the way,
accounting for $386.8 million of expenses during the period, making it PAL’s single biggest expense item.
PAL also recognized a non-cash fair valuation expense adjustment of $83.8 million as part of its total expenses.
More expenses
In spite of the continued improvement in revenues, the increase in expenses far outpaced revenue growth, resulting in a loss of $123.1 million, PAL said.
However, additional changes in the fair valuation of outstanding derivative assets, amounting to $9.3 million and reported as other comprehensive income, reduced the total comprehensive loss to $113.8 million for the first half of PAL’s fiscal year.
In September, PAL president Jaime Bautista said it was likely that the airline would see a sharp drop in net profit in the fiscal year to March 2009 due to the oil price rise.
PAL, which is controlled by Lucio Tan, one of the country’s richest men, has previously posted four consecutive years of profitability. It emerged from an eight-year rehabilitation in October 2007.
The fragile state of the industry has prompted the chief executive of the International Air Transport Association, the global grouping of the world’s largest carriers, to warn that airlines face massive losses and are at a critical crossroad.
“The airline sector is in trouble. Losses this year could reach $6.1 billion, more than wiping out the $5.6 billion that airlines made in 2007. Falling demand and rising costs are reshaping the industry,” said Giovanni Bisignani in a recent statement. (AFP/with PR)
