Philippine Airlines lower profit due to costly jet fuel

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Philippine Airlines lower profit due to costly jet fuel
Philippine Airlines (PAL) on Tuesday said profits for fiscal year ending March next year is likely to fall by double digits on costlier jet fuel prices, the carrier’s biggest expense, local daily the Manila Times reported.

On the sidelines of PAL Holding’s stockholders’ meeting, Jaime Bau¬tista, PAL president told reporters that the company expects a low double-digit decline in net income this fiscal year, mostly because of higher jet fuel prices.

Fuel accounts for about 35 percent to 40 percent of an airline’s operating cost per passenger and is the second-highest expense next to labor.

“We’re expecting $1.7 billion in revenue this fiscal year,” Bautista said, adding this is an 18-percent growth from last year.

Bautista also said the company expects a net loss in the first half of the year, dragged by poor second-quarter results.

In the first quarter of the year, the airline’s net income fell 78 percent to $12.4 million compared with the $12.4 million in the same period of its fiscal year 2007.

PAL’s fiscal year starts April and ends March.

The country’s flag carrier posted a 20-percent increase in revenues to P$432.4 million during the current fiscal year ending June.

Bautista said the company is setting aside about $500 million for the acquisition of nine Airbus A320s this year.

He said PAL expects passenger traffic to grow 10 percent to 11 percent this fiscal year.

Last fiscal year, PAL carried 7.6- million passengers.

From April to June, PAL carried 2.16 million passengers on 14,495 flights, up 11.6 percent and 25.6 percent, respectively, over the same period in 2007. Passenger load factor stood at 80 percent.

PAL said it will also increase flights to its US West Coast gateways of Los Angeles and San Francisco late next month, adding up to 1,320 seats weekly on its busy trans-Pacific routes in time for the peak Christmas travel period.

“The trans-Pacific sector is PAL’s most important long-haul market and we are infusing extra capacity as well as upgraded service and equipment into it,” Bautista said.

“In fact, our first newly refurbished and reconfigured Boeing 747-400, featuring state-of-the-art seats, interiors and amenities, will be deployed on the trans-Pacific route as soon as it rejoins the fleet in a few days,” he added.

PAL flies to 43 destinations, 18 domestic and 25 international points. It also serves the US, Japan, Hong Kong, Korea and the Middle East routes.

PAL Holdings owns about 84.7 percent of the flag carrier. It earlier acquired six holding companies that collectively own 81.57 percent of PAL. Separately, PAL Holdings also owns 3.1 percent of PAL through a subsidiary, PR Holdings Inc.