PAL REPORTS $33.5M NET LOSS / FOREIGN AIRLINES WANT TO MOVE TO NAIA 3

MANILA, FEBRUARY 18, 2012 (ABS-CBN) Flag carrier Philippine Airlines (PAL) said Friday it booked a net loss in the third quarter of its fiscal year ending December 2011 due to skyrocketing jet fuel prices and disruption in its service brought about by the strike staged by its ground workers.

PAL's net loss stood at $33.5 million from October to December last year, a reversal of its $15.1 million net income in the same period the year before.

Revenues dropped 3.8% to $386 million from $397 million in 2010 due to slow passenger traffic as well as weak cargo operations.

"While there were improvements in yields for both passenger and cargo compared to the same period last year, load factors lagged behind," the airline said in a statement.

PAL president Jaime Bautista has said that the strike staged by members of the PAL Employees' Association last year also affected the airline's third-quarter financial performance.

"There was a time that our domestic was down 20 flights per day, but now we are back to normal." The airline usually mounts 140 flights a day.

Meanwhile, PAL's operating expenses also eroded revenues, rising 9% to $419.5 million because of high jet fuel costs. Jet fuel prices rose to $129.75 per barrel in October to December, from an average of $100.96 per barrel in the same months of 2010.

Fuel accounts for about 50% to 60% of an airline's operating cost per passenger, and is the second-highest expense next to labor.

Roxas says foreign airlines want to move to NAIA 3 abs-cbnNEWS.com Posted at 10/05/2011 7:09 PM | Updated as of 10/05/2011 7:09 PM

MANILA, Philippines - Transportation and Communications Secretary Mar Roxas said Wednesday "many" foreign airlines were still interested to set up shops in the partially operational Ninoy Aquino International Terminal (NAIA) 3.

"There are many foreign airlines. Jet Airways is interested. There are others that have indicated as well," he said.

In March, Japanese airline All Nippon Airways (ANA) began operations at NAIA 3, becoming the first foreign carrier to fly out of the terminal, which has been subject of an ownership dispute for several years now.

Japanese contractor Takenaka Corp., which has yet to complete an unfinished section of NAIA 3, gave the go signal for ANA to operate in the terminal.

Takenaka is the primary subcontractor of the Philippine International Air Terminals Co. Inc. (PIATCO), the consortium that built NAIA 3.

The Philippine government and PIATCO have been in a legal battle over the ownership and operation of NAIA 3.

NAIA 3 was supposed to have been opened in 2002, but this was delayed when the Arroyo government cancelled PIATCO's contract due to alleged irregularities.

The Supreme Court declared PIATCO's contract null and void in 2003, prompting the government to take over the airport terminal a year later.

PIATCO was seeking over $842 million compensation for the expropriation of the terminal, but was only awarded a fraction of the amount by a local court early this year. PIATCO elevated its case to the Court of Appeals. In the meantime, a separate arbitration case filed by PIATCO and its German partner Fraport AG was still ongoing.

Currently, NAIA 3 is being utilized by Cebu Pacific and Air Philippines.

President Aqunio wants the terminal to be fully operational by the end of this year to cope with growing passenger traffic and soothe investors' concerns over legal uncertainties in the country.

Category 2 status

Roxas, meanwhile, hopes that the Philippines' aviation safety status will be raised by the US Federal Aviation Administration (FAA) soon.

"There will be an interim review in December. We hope to get a good indication by December what else we need to do so when the final review happens next year we will be ready," he said.

The US FAA downgraded the Philippines' safety status to Category 2 in January 2008. Category 2 prohibits local carriers from expanding their operations in the US.

Philippine Airlines, for instance, can only fly 33 times a week to various US destinations, including Los Angeles, San Francisco, Honolulu, Guam and Las Vegas via Vancouver.

"The basic challenge here has to do with rigor and comprehensiveness on our regulation. For example, not having a manual or checklist for all these regulations, is really something that has to be addressed," said Roxas.


Chief News Editor: Sol Jose Vanzi

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