LEGACY carrier Philippine Airlines (PAL) started the year on a positive note, after recording $85 million in comprehensive income in the first quarter of the year, a huge turnaround from the $20.7-million net loss posted the year prior.
The sustained financial comeback was attributed to the declining price of fuel that resulted in lower airfare. This spurred air travel in and out of the Philippines, helping the airline recuperate from the rising expenses during the period.
Revenues rose by 30 percent to $627 million in the first three months of the year from $482.4 million in the same period last year. The growth was fueled by the increase in passenger traffic after new international destinations were opened, as well as the expansion in domestic route network, following an enhanced commercial arrangement with PAL Express.
The airline also embarked in more aggressive marketing and sales campaigns, resulting in improved yields per passenger revenue kilometer flown.
Total operating expenses in the first quarter amounted to $556 million, 11 percent higher than last year’s print of $500.3 million, due largely to growth in passenger volume as a result of operating more flights.
The upsurge in revenues, however, outpaced the rise in operating expenses. The increase in operating expenses was tempered mainly by the decline in fuel costs. Jet fuel prices dropped dramatically from an average of $130.92 per barrel from January to March 2014 to $83.28 per barrel for the same period in 2015.
In the first quarter of 2015, PAL took delivery of two brand-new Airbus 321 and disposed of four aging Airbus 340 and two Airbus 330 airplanes.
PAL also returned to New York starting March 15, 2015, with service via Vancouver. Several domestic routes were added to the network, such as thrice-weekly flights to Tablas in Romblon and the reopening of the Cebu hub.
The airline operated a total of 10,948 roundtrip flights and served almost 3 million passengers in the first quarter of 2015.
The carrier led by billionaire Lucio C. Tan first snapped out of the red zone last year, after registering P787 million in comprehensive income for the full-year period. It represented a dramatic turnaround from the P9.12-billion loss incurred in the last nine months of 2013.
Two years ago, the carrier shifted its accounting period from a fiscal year basis that ends in March to a calendar year, instead. This resulted in a shorter period of nine months for 2013.
The flag carrier started to see its bottom line plummeting many years back, after its failed attempt at saving costs by fuel hedging. The downward trend continued even with the change in management and the massive restructuring of its fleet and route.
It posted profits in some quarters, but, still, the bleeding continued, as Filipinos shift their air-traveling needs to budget carriers, such as Cebu Pacific, AirAsia and Tigerair Philippines. The company was then bought back from San Miguel Corp., and Tan started handling the management with his former executive Jaime J. Bautista at the forefront.
Baustista started to clip what the food-to-infrastructure firm started, initializing reforms from the rationalization of the multibillion-dollar acquisition of new planes from French aircraft maker Airbus to postponing plans of launching more flights to Europe.
“We need to consolidate and build on these gains to strengthen the foundation for future growth, aware that we operate in a very volatile environment,” he said on Monday. “As always, we remain focused on our goal of transforming PAL into the airline of choice in all markets it serves.”