WITH a new president at the helm, Philippine Airlines (PAL) is focusing on improving its finances to return to profitability, starting with possible cost synergies and outsourcing.
Following the appointment of new PAL President and Chief Operating Officer Gilbert F. Santa Maria last week, PAL Vice Chairman Lucio “Bong” K. Tan, Jr. said the company is exerting efforts to address internal problems amid rising costs.
“Revenue is actually going up. We just have to look into the cost. The cost is also going up,” he told reporters after the company’s board meeting last week.
He noted there may be a lot of inefficiencies within the company that would need to be addressed as operations have been “very administration-heavy.”
In a regulatory filing, listed parent of the company PAL Holdings, Inc. said it had a total of 8,217 employees around the world as of end-2018: 6,689 employees in PAL and 1,528 employees in Air Philippines Corp. (APC), a 99.97%-owned subsidiary of the company.
This pool can further be broken down into 3,043 ground employees and 3,646 flight crew for PAL, and 834 ground employees and 694 flight crew for APC.
Mr. Tan said with the increasing costs of the company — up 17.8% to P155.68 billion as of end-2018 — PAL is inclined to “maybe start doing synergies and maybe outsourcing.”
With this plan, Mr. Santa Maria fits well in PAL’s strategy as his business process outsourcing background had exposed him to a large team when he was chief operating officer of DC-based IBEX Global Solutions PLC. IBEX said in its website it has nearly 13,000 agents in its global network.
Aside from cost synergies, Mr. Tan also mentioned beefing up the company’s IT department and taking off from other airlines’ success in digital integration for ticket sales.
“I heard other airlines are doing half of their ticket sales from website. Ours is still under 20%,” he said, noting the immediate improvement of PAL’s online platform is seen to address “a lot of low-hanging fruits” to boost the company’s revenue.
Mr. Tan added PAL’s new partner, Japanese carrier ANA Holdings, Inc., may help in sharing best practices to improve its operations.
The assistance of Lufthansa Group, which handles renowned aviation consultant Lufthansa Consulting GmbH, is also being sought by the company.
“We are engaging Lufthansa consultants. This group has been doing a lot of successful turning around of airlines… So give us probably six to eight months, we might find good results,” Mr. Tan said.
PAL has been recording losses since 2017 due to higher expenses on jet fuel, the expansion of its fleet, increased flight frequencies and mounting of new routes.
As of end-March, the company’s attributable net loss stood at P838.17 million, narrowing by 24.3% from P1.11 billion a year ago.
“So far, it’s not that promising. But hopefully (net loss) will be less than last year,” Mr. Tan said on whether PAL would return to profit by end-2019. — Denise A. Valdez
