PAL RECOVERS, POSTS P286-MILLION PROFITManila, May 27, 2003 (PNA) - - Flag carrier Philippine Airlines (PAL) posted a P286 million (US$5.41 million) net income for its fiscal year ending March 2003, recovering from a P1.7 billion loss recorded in the previous fiscal year. However, the airline failed to reach a P1 billion profit target for the fiscal year, nor the estimated P400-P500 million net income, as the Severe Acute Respiratory Syndrome (SARS) scare greatly affected the airline. Avelino Zapanta, PAL president and chief operation officer (COO), said the net profit ended up lower due to additional expenses incurred for SARS contingency measures. "It turned out we incurred quite a lot of expenses because of SARS. We underestimated the impact of SARS," Zapanta said. Among the additional expenses were fumigation agents, some disposable items such as thermometers to get the temperature of passengers and face masks provided to passengers. Aside from SARS, the war in Iraq also affected the revenues of the company, Zapanta said. He said PAL saw the SARS scare positively affecting the domestic routes as tourist opt to go around the Philippines instead of the usual summer vacations spots of Hong Kong and Singapore. Zapanta said PAL felt the slump in the traffic in Hong Kong route given the SARS scare. This had a significant impact as this is its second most profitable route for the airline. PAL gained in the long-haul routes as passengers now opted to fly direct and nonstop with the SARS scare. However, this did not help regain lost income from Hong Kong, he said. He pointed out that Japan, PAL's most profitable destination, has not been affected by the SARS scare, saying "it's doing well." Before pegging the net income target of P1 billion, PAL originally projected its profit at only P11.7 million immediately after the 9-11 terrorist attacks. He pointed out that balikbayans and overseas Filipino workers (OFWs) started traveling following the 9-11. Thus, when the fiscal year began in April 2002, the market was seen as having recovered. Despite the lower than expected net income, PAL has recovered the P1.7 billion loss the previous year due to 9-11. This was the first time that the airline was in the red since it started its financial rehabilitation in 1999. PAL was even planning to go on public listing but a net loss on its third year of rehabilitation following two years of profitability prevented it from doing so. Zapanta said it is too early to say at this time how the airline will do for this year.
Reported by: Sol Jose Vanzi
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