PAL Holdings income plummets 57% on weak cargo sales

PAL Holdings Inc., the operator of flag carrier Philippine Airlines, saw earnings fall by more than half in the first nine months of the year, as revenues came in weaker than expected due to lower cargo sales.

In a stock exchange filing, PAL Holdings said net income from January to September this year hit P2.55 billion, down 57 percent from the same period in 2015.

PAL Holdings noted revenues were slightly higher at P85.35 billion, up only 3.5 percent.

Most of these came from passenger revenue, which rose 4.7 percent to P71.47 billion. Cargo revenues, on the other hand, dropped to P4.94 billion from P5.46 billion in the same nine-month period for 2015.

Weak peso

PAL Holdings added revenues during the period were mainly propped up by the weaker Philippine peso against the US dollar. Had the exchange rate remained unchanged, the firm said revenues would have declined by P589.6 million.

Positive effect

“The decrease was brought about mainly by lower cargo revenues generated during the current period as a result of the positive effect of the port congestion in Manila and port strike in the United States in 2015,” PAL Holdings said.

For the third quarter alone, PAL Holdings swung to a net loss of P1.98 billion from an income of P243.5 million.

Total revenues during the quarter hit P27.78 billion, up 6 percent.

Additional flights, routes

PAL Holdings said this was “primarily due to the increase in number of passengers as a result of additional flight frequencies and introduction of new routes.”

For the nine-month period, PAL Holdings said total operating expenses grew 8.9 percent as it added more flights and routes.
Specifically, the company noted the increase was due to higher maintenance, aircraft and traffic servicing, reservation and sales and passenger service partly offset by lower expenses related to flying operations.

Fuel expenses

Flying operations declined 0.4 percent mainly on lower oil prices compared to the same period last year.

PAL Holdings said fuel expenses for the nine-month period dropped by 7.8 percent as a result of the decline in average price per barrel of aviation fuel to $65.90 in 2016 from $86.56 in 2015.

Despite a weak third quarter, PAL president Jaime Bautista said last week the final three months of 2016 would likely end profitable given that this is a peak period for travel.