Record Profits for Philippine Airlines

Philippine Airlines has reported a net income of $140.3 million for its financial year ending March 31, 2007, the largest profit in its 66-year history and an affirmation of the flag carrier's robust financial health eight years into its restructuring program.

In a filing with the Securities and Exchange Commission (SEC), PAL said the surplus was a "significant improvement" over the preceding fiscal year's profit of $22.8 million - a more than six fold jump.

It was also PAL's third straight annual profit, a modest streak achieved in spite of adverse operating conditions, including skyrocketing fuel prices, the liberalization of the aviation industry, continuing global terrorist threats and other issues affecting travel, as well as the airline's cost base.

"These solid results, not just from last fiscal year but over the past eight years under restructuring, confirm that PAL is fully recovered and is now firmly on track towards long-term profitability," said PAL president Jaime J. Bautista.

"We are consolidating these gains by reinvesting them in the business in order to further improve our products and services, which is critical in shoring up our competitive position in the liberalized aviation milieu."

Last year's record profit came on the back of a $158.4 million or 12.8% upsurge in revenues, which also reached a new high of $1.39 billion. Strong performances by the passenger and cargo businesses, coupled with some non-recurring items, contributed to the expansion.

Passenger carriage led the way, with PAL ferrying a total of 6.9 million passengers on 21,252 flights during the year, attaining a load factor of 76.8% - its highest in 15 years.

On the other hand, expenses increased by 6.4% to $1.3 billion, principally due to the continued rise in jet fuel prices from an average of $71.79 per barrel in 2006 to $79.81 per barrel in 2007. This added $35.7 million to PAL's fuel bill, which ballooned to $401.9 million last fiscal year.

PAL managed to keep other expenses in check by controlling costs, and improving systems and productivity. For instance, the airline recently completed the implementation of electronic ticketing throughout its network.

Since entering an SEC-supervised rehabilitation framework in June 1999, PAL has consistently posted an operating income for eight consecutive years and a net income in six of those eight years, key indicators that the flag carrier is on the cusp of a sustained run of financial viability.

Bautista said the profit plow-back is manifested by PAL's ongoing modernization programs for both its narrow-body and wide-body fleets. 

The airline is in the midst of acquiring up to 20 Airbus A320-family jets, with six units already delivered, four due later this year and five more in 2008, in addition to five option aircraft.

PAL has also signed for the acquisition of six Boeing 777-300ER aircraft, comprising four firm orders and two leased units, to boost its long-haul operations to North America and other destinations.

PAL is also to invest from $50 to $100 million to reconfigure and refurbish cabin interiors on its existing wide-body fleet.

Major investments will also go towards continuously upgrading the airline's safety and security standards - already among the industry's most stringent - as well as its technology, infrastructure and human-resource assets.

Part of this thrust is the planned investment of up to $50 million in the development of PAL's presence at the emerging aviation hub in Clark Field, Pampanga.

"We are undertaking all these as an investment for the future. Our vision is for PAL to reclaim its accustomed place among the region's premier airlines and we are on track towards that goal," Bautista said.

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