MANILA -- Philippine Airlines (PAL) posted a weak US$31.6 million (roughly P1.4 billion) or an 11 percent fall in net profit for its peak season from April to June this year.

The decline in profit added to PAL's woes, as its attempts to return to profit have been hit by a looming labor strike and several pilots leaving for higher paying airlines.

The lower income is attributed to higher jet fuel prices and reduction in "other income."

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PAL reported to the Securities and Exchange Commission (SEC) US$426.7-million revenue for the first quarter of its fiscal year 2010-11, a marked improvement of US$99.0 million or 30 percent higher than the US$327.7 million registered last year.

"During the first three months of its current fiscal year, the airline benefited from improvements in passenger traffic as well as cargo, reflecting signs of economic recovery worldwide. Higher yields generated per seat, offering also complemented growth in passenger demand," said PAL in a statement.

However, expenses surged to US$391.6 million, as the cost of jet fuel, its biggest operating expense, rose to US$55 million with fuel prices soaring to US$107.47 per barrel from US$70.28.

The airline also reported a reduction in "Other Income" by US$47.5 million to US$15.4 million for the first quarter this year, compared with the US$62.9 million for the same period in 2009.

PAL president and chief operating officer Jaime Bautista said the airline is finding ways to "generate more revenues and control costs" amid the slow recovery of the global airline industry.

He added that the 69-year-old company must "swallow bitter pills" and handle its labor issues with "utmost care" in a bid to survive cutthroat competition.

The labor department in June approved PAL's plan to outsource its call center, catering, and ground services operations in a bid to save P1.5 billion or equivalent to 2,600 employees.

The action, however, was met with opposition from various groups including the PAL Employees Association, which is mulling to file a strike with the Labor department.

Compounding PAL's woes are the unannounced resignations of 25 pilots manning their domestic destinations last month and the unsuccessful mediation talks between PAL management and its disgruntled flight attendants and cabin crew.

The Flight Attendants and Stewards Association of the Philippines (Fasap) rejected the PAL management's P80 million one-time offer last week, saying the compensation package is not enough to bring economic relief to their members.

The airline reported a narrower loss for its last fiscal year ending March 2010 at US$14.4 million from US$297.8 million a year ago.

But PAL posted US$35.5 million profit in the first quarter ending June 2009. The airline's fiscal year starts on April and ends on March 2011. (Virgil Lopez/Sunnex)