PAL TURNS AROUND, POSTS P1.2-B PROFIT
MANILA, July 28, 2005 (STAR) By Zinnia B. Dela PeŮa - Flag carrier Philippine Airlines (PAL) of tobacco and beer magnate Lucio Tan swung to a net income of P1.2 billion in its fiscal year ending March this year from a P643-million loss the previous level, mainly due to higher revenues and foreign exchange gains.
Operating revenues grew 22 percent to P53.97 billion from P44.09 billion, largely due to the increase in net yield per revenue passenger kilometer and in the number of passengers carried, as well as higher exchange rates of the Philippine peso against the US dollar.
Higher fuel consumption, however, resulted in a 16 percent jump in the carrierís operating expenses and charges to P51.95 billion compared with only P44.73 billion. Fuel cost rose 38 percent to P13.53 billion as against P9.78 billion. Also contributing to the increase in expenses were the higher fuel prices per barrel from $40.19 to $47.74.
Increase in the number of flights during the current fiscal year as well as the effect of the peso-dollar movement had the effect of increasing the maintenance cost by eight percent or P626 million.
As of end-March 2005, PALís total assets amounted to P103.56 billion, four percent lower than the previous levelís P107.82 billion. The reduction represents mainly the decline in the property equipment by P7.49 billion offset by the increase in total current assets by P3.04 billion.
PALís total liabilities, on the other hand, fell five percent from P104.87 billion as of March 31,2004 as a result of the servicing of various liabilities covered by the airlinesí amended and restated rehabilitation plan.
PALís improving performance puts the flag carrier firmly back on the growth track and shows how the company managed through tough times and survived one crisis after another. In the first year of its 10-year rehabilitation, PAL reported a meager profit of P44 million, ending six straight years of massive losses.
By the second year, the company reported earnings of P419 million, securing one of the dramatic turnaround stories in Philippine business.
In the third year, the airline would have been in the black had it not been for the debilitating impact of the Sept. 11 terrorist attack in the US. It registered a P1.6-billion net loss, with a dip in cargo revenues and a spike in operating expenses. But for fiscal year 2002-2003, PAL was back in the black, posting a net income of P295 million, albeit much less than the original target of a billion pesos due to the outbreak of the Iraq war and the SARS scare.
Under its approved rehabilitation plan, PAL had to scale down its manpower, reduce the number of operating divisions into three: commercial group, finance and operations, and cut down its international routes mainly only those with the highest load factors. The airlines also reduced its fleet from 56 aircraft to 22.
Just last week, PAL approved the sale of some of its equipment to US-based Danbee Aerospace for $2 million.
Reported by: Sol Jose Vanzi
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