DUE to high fuel cost, flag carrier Philippine Airlines (PAL) reported that its operating income for the first six months of 2008 dropped by 78 percent.
In a statement with the Securities and Exchange Commission (SEC), PAL said their operating revenues from January to June were placed at US$432.4 million and operating expenses at US$420 million.
This means PAL generated a modest operating income of US$12.4 million for the period in review, but a substantial decline of US$43.3 million or 78 percent over the same quarter in 2007.
The operating revenues for the quarter were 20 percent higher than previous year's level.
On the other hand, the airline said their revenue passenger kilometers (RPK), the industry yardstick for passenger sales volume, increased by 4.3 percent to 4.73 billion RPK's. This is a result of PAL carrying 2.16 million passengers on 14,495 flights for the quarter, up by 11.6 percent and 25.6 percent, respectively, over the same period in 2007.
"The positive result shows PAL's underlying strength and resilience in the face of the unprecedented escalation of fuel prices in the period under review," said PAL president Jaime Bautista adding that passenger load factor was at 80 percent.
Expenses related to PAL's passenger, cargo and related services or operating expenses was up by 38 percent over the same quarter in 2007 due mainly to soaring oil prices that increased by 70 percent year on year.
While PAL's performance for the first quarter remained positive bucking the trend where many airlines have started to report operating losses, PAL faces serious challenges throughout the rest of the year with fuel prices expected to remain well over US$100 per barrel.
The sharp increase in fuel prices prompted Giovani Bisgnani, chief executive officer of the International Air Transport Association, the global grouping of the world's largest carriers, to warn that the industry faces massive losses and is at a critical crossroad.
Moreover, for the period April to June 2008, PAL recognized a net gain from the fair value changes of its outstanding derivative positions and with the modest operating income described above, together with other non-operating expenses, resulted in a total comprehensive income of US$45.8 million.
Earlier, Bisgnani said the spiraling fuel cost is greatly affecting the airline industry.
"The airline sector is in trouble. Losses this year could reach US$6.1 billion, more than wiping out the US$5.6 billion that airlines made in 2007. Falling demand and rising costs are reshaping the industry," he said. (MSN/Sunnex)
