PAL Holdings losses mount
PAL Holdings Inc., the parent firm of flag carrier Philippine Airlines, reported that its losses in the quarter ending in December had widened due to recent expansion efforts—where rising costs outpaced growth in revenue.
In a disclosure to the Philippine Stock Exchange (PSE), the publicly listed holdings firm said its net loss for the October-December period of 2012 reached P2.62 billion, higher than the P1.45 billion in losses reported in the same period the previous year.
With the effects of foreign exchange factored in—since PAL’s transactions and revenues are mostly denominated in dollars—the company’s total comprehensive net loss rose to P2.96 billion from the P1.46 billion reported in 2011.
In the first three quarters of PAL’s current fiscal year, losses reached P3.494 billion—an improvement of 4 percent from the same period the year before.
PAL’s fiscal year ends this March.
Its revenue rose 2.4 percent to P55.68 billion in the nine months to December as a result of improved yields form every ticket sold, while total expenses increased by 0.8 percent to P57.97 billion.
Maintenance costs pushed PAL further into the red, rising 17.8 percent to P6.95 billion, “as a result of higher aircraft, engine and component repair costs incurred during the period.”
The company said revenue from flying operations fell 1.5 percent to P34.06 billion.
“The drop in flying operations was brought about mainly by the effect of the peso-dollar exchange rate fluctuations,” PAL said. “Had there been no change in the exchange rate, flying operations would have increased by 1.3 percent.”
PAL said it benefited from the decline in average jet fuel price per barrel from $133.42 in 2011 to $131.07 in 2012. Likewise, the effect of having its Boeing 747 aircraft fully depreciated during the latter part of the previous fiscal year led to a reduction in aircraft depreciation charges by P538.1 million.
The airline’s total assets hit P95.37 billion at the end of December, rising from P71.78 billion in March.
PAL reported that 11 new planes were delivered during the nine months, bringing its current fleet size to 64. Seven of the new planes were leased to AirPhil Express, the company’s sister firm, leading to a rise in lease revenue. The airline’s lease income rose to P1.84 billion for April to December from P1.248 billion the year before.
PAL also disclosed that it spent P18.76 billion to prepay for the new planes it ordered. This was funded by San Miguel Equity Investments, a subsidiary of San Miguel Corp., after it infused P17 billion in fresh capital into the airline.
San Miguel Corp.’s investment in the airline, which was done via an acquisition of a 49-percent stake in PAL Holdings’ parent, Trustmark Holdings Corp., allowed the conglomerate to acquire a controlling stake in the flag carrier.