MANILA, November 26, 2003  (STAR) By Zinnia B. Dela Peña - Flag carrier Philippine Airlines (PAL) said yesterday its net loss widened more than ten-fold in the July to September period to P383.8 million, due to lower passenger loads and higher expenses.

In its financial report submitted to the Securities and Exchange Commission, PAL said its losses in the second quarter of its fiscal year stood at only P37.3 million in 2002.

Aside from lower passenger revenues, PAL attributed the higher loss to increased depreciation expense and fuel cost during the period.

Operating revenues for the period fell 8.1 percent to P9.86 billion from P10.74 billion, mainly due to lower number of passengers carried.

Operating expenses, however, declined by 2.41 percent from P9.33 billion to P9.1 billion as there were lesser number of engines repaired during the quarter.

But fuel cost, which contributed to the large increase in flying operations, rose 13.1 percent as a result of the payment of specific tax on imported fuel consumed in domestic operations effective February 2003 and increases in fuel prices per barrel from $35.11 to $37.18.

Depreciation expense likewise increased by P136.1 million or 12.9 percent from last year’s same quarter figure of P1.05 billion. The increase was attributed mainly to the change in the accounting basis, which took effect in March 2003, in depreciating passenger aircraft from the estimated useful life of between 15 to 25 years to a fixed period of 20 years.

Traffic servicing fixed costs also substantially contributed to the aircraft and traffic servicing expenses by 68.7 percent. This was the result of reclassifications made for certain traffic-related expenses handled by ground handling agents at the foreign stations.

As of Sept. 30 this year, PAL’s total assets amounted to P106.9 billion, a decrease of eight percent from the March 2003 figure of P107.77 billion. This was mainly brought about by the lower cash earnings from operations and the net effect of foreign currency fluctuations on the foreign currency-denominated assets.

Total liabilities, meanwhile, declined by P218.2 million as against the March 2003 balance of P104.93 billion. This was the result of payments made on various liabilities covered by the amended rehabilitation plan, net of the effect of the restatement of these obligations to the current exchange rates resulting from the depreciation of the peso against the US dollar from P53.604 in March 2003 to P55.10 per $1 as of end-September 2003.

Reported by: Sol Jose Vanzi

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