PAL operator trims loss in Q1 as fuel costs decline

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Philippine Airlines (PAL)

AFTER a challenging 2018, local airlines are showing signs of recovery, with both Philippine Airlines (PAL) and Cebu Pacific recorded a growth in passenger volume during the first three months of 2019.

PAL Holdings, Inc., the listed operator of the flag carrier, trimmed its attributable net loss to P838.17 million during the January to March period, from the P1.11- billion attributable net loss it booked in the same period last year.

PAL’s consolidated revenues grew 7.2% to P39.27 billion, driven by the passenger volume increase brought by additional flight frequencies and new routes.

Consolidated expenses of the flag carrier were flat at P36.81 billion, with flying operations still the biggest contributor at P19.15 billion, albeit 3.4% lower than last year’s P19.82 billion.

PAL said the lower flying expenses was due to the decrease in jet fuel prices.

“Fuel costs dropped by 10.2% due to the decrease in average fuel price per barrel from $88.36 in 2018 to $85.04 in 2019 partially offset by the increase in fuel consumption as a consequence of increase in number of flights operated,” the company said.

Reservation and sales costs of PAL increased 17.9% to P444.41 million because of the higher credit card services fees and booking fees from the increase in passenger volume. Maintenance expenses also grew 8.2% to P5.12 billion due to the arrival of new aircraft that started in the second quarter last year.

Meanwhile, Cebu Pacific operator Cebu Air, Inc. reported its net income has more than doubled in the January to March period to P3.43 billion from P1.44 billion in the same period in 2018, thanks to higher passenger and cargo revenues.

Total revenues climbed 16% to P21.18 billion, driven by a double-digit growth in passenger, cargo and ancillary revenues.

Passenger revenues grew 14.6% to P2 billion for the January to March period.

“This increase was mainly attributable to the 8.5% growth in passenger volume to 5.289 million from 4.876 million last year as the Group added bigger A321 aircraft to its fleet. The increase in average fares by 5.7% to P2,965 for the three months ended March 31, 2019 from P2,805 also contributed to the increase in revenues,” Cebu Air said.

Cargo revenues rose 12.7% to P162.86 million, while ancillary revenues jumped 22.7% to P750.54 million.

The company saw an 8.4% increase in operating expense in the first quarter to P17.35 billion.

“The increase was driven by its expanded operations, growth in seat capacity from the acquisition of new aircraft and the weakening of the Philippine peso against the U.S. dollar…,” Cebu Air said in a regulatory filing.

The Philippine peso depreciated to an average of P52.36 per US dollar during the first quarter, versus the average of P51.49 per US dollar last year.

Flying operations expenses went up 3.8% to P7.173 billion for the three months, mainly due to the increase in pilot training costs.

“Fuel expense was also higher due to the 7.9% increase in fuel volume offset by lower average published fuel MOPS price of $76.50 per barrel for three months ended March 31, 2019 from $79.99 per barrel in 2018,” the Gokongwei-led carrier said.

Depreciation and amortization costs grew 29.9% to P2.24 billion due to the arrival of several new aircraft that started in 2018: six A321 CEOs (current engine option), three ATR 72-600 and one A321 NEOs (new engine option). — Denise A. Valdez