DESPITE an environment of rising costs, Philippine Airlines (PAL) managed to post a net income of $45.8 million in the April to June quarter from a restated $32.1-million recorded in the same period last year.

The flag carrier said it recognized a net gain from the fair value changes of its outstanding derivative positions. “We were able to generate a modest operating income. Other than that, we also recognized other income and recorded a small gain as well in the valuation of derivative assets,” said Marianne Raymundo, PAL vice president for financial services.

For his part, PAL president Jaime Bautista, said “The positive result shows PAL’s underlying strength and resilience in the face of the unprecedented escalation of fuel prices in the period under review,” increased passenger load factor also contributed to PAL’s healthy performance.

The airline, controlled by the tycoon Lucio Tan, said it carried 2.16 million passengers on 14,495 flights during the quarter, up 11.6 percent and 25.6 percent, respectively, over the same period in 2007. Passenger load factor was a high 80 percent.

Operating expenses stood at $420 million as against $432.4 million in operating revenues. As such, PAL recorded $12.4 million in operating income, 78-percent lower, or about $43.3 million, from that of last year.

PAL said operating revenues for the quarter was 20-percent higher than the previous year’s level. Revenue passenger kilometers (RPK), the industry yardstick for passenger sales volume, increased by 4.3 percent to 4.73 billion RPKs.

Operating expenses, or those related to PAL’s passenger, cargo and other operations, was up by 38 percent over the same quarter in 2007, primarily due to soaring oil prices, which increased by 70 percent year-on-year.

While PAL’s performance for the first quarter remained positive, bucking the trend where many airlines have started to report operating losses, the flag carrier faces serious challenges throughout the rest of the year with fuel prices expected to remain well over $100 per barrel.

The fuel situation has prompted the chief executive of the International Air Transport Association, the global grouping of the world’s largest carriers, to warn that the industry faced massive losses and was at a critical crossroad.

“The airline sector is in trouble. Losses this year could reach $6.1 billion, more than wiping out the $5.6 billion that airlines made in 2007. Falling demand and rising costs are reshaping the industry,” said Giovanni Bisgnani in a recent statement. PAL’s fiscal year ends every March.

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PAL posts profit despite rising operational costs

DESPITE an environment of rising costs, Philippine Airlines (PAL) managed to post a net income of $45.8 million in the April to June quarter from a restated $32.1-million recorded in the same period last year.

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