The operator of flag carrier Philippine Airlines saw a turbulent first semester this year after reporting a net loss blamed on the surge in fuel prices.
PAL Holdings Inc.’s unaudited financial statements from January to June 2017 showed the airline operator posted a net loss of P1.63 billion, reversing a P4.53-billion profit in the same period last year.
Demand during the period, which covered the busy summer travel season, remained strong. PAL’s total revenues hit P67.76 billion, up 17.7 percent.
Its core passenger revenues were up 16.5 percent to P56.5 billion, signaling healthy demand. Revenue growth was also pulled higher by fast-growing ancillary revenues, which covers non-ticket sales such as add-on baggage fees. Ancillary revenues jumped 25 percent to P5.3 billion during the six-month period.
Yet, the big jump in fuel prices hurt PAL’s bottom line. Fuel costs account for a major slice of an airline’s operating expense. In the first half of 2017, PAL said fuel costs increased about 74 percent.
As such, its flying operations expenses grew 41.6 percent to P38.3 billion. This accounted for about half of its total expenditures, which rose 32.5 percent to P69.3 billion.
Other factors also drove expenses higher, including its bigger fleet size and expanded operations. PAL cited higher aircraft maintenance costs and lease payments associated with newly acquired planes.
For the second quarter alone, PAL posted a net loss of P500.9 million, reversing a profit of P1.6 billion in the same period last year.