PAL profit balloons 8-fold to P436 M

Philippine Airlines today reported an unaudited net income of P436.5 million for the fiscal year ending March 31, 2001 – a leap of more than 850% over its profit a year earlier.

In a report submitted to the Securities and Exchange Commission (SEC), PAL disclosed details of its performance for the 2000-2001 fiscal year, its second under the terms of an SEC-supervised rehab plan.

The airline said it was able to pump up revenues, ride out the upsurge in expenses and take advantage of operational efficiencies during a particularly difficult year for the aviation industry.

As a result, PAL recorded its second straight annual surplus, cementing the modest gains of its fledgling turnaround in fiscal 1999-2000, when it earned P45.8 million.

Prior to that year, PAL endured six consecutive years of losses. The airline entered receivership in June 1998 and has now produced profits for two years in a row – the first time it has done so since 1991-1993.

“We are focused on our goal of sustained profitability,” said PAL chairman and chief executive officer Lucio C. Tan. “This accomplishment bolsters our confidence that PAL will rejoin the ranks of Asia’s leading carriers in due time.”

“Indeed, we could have earned more last year had it not been for the sharp rise in the price of aviation fuel and the volatility in the foreign exchange rate, both of which far exceeded our projections,” noted Tan.

Airline president Avelino L. Zapanta attributed the surplus to efficiencies spawned by restructuring measures undertaken in previous years.

A prime example was the consolidation of PAL’s domestic and international operations at Centennial Terminal 2 of the Ninoy Aquino International Airport in 1999.

The new hub enabled PAL to offer seamless connections to passengers, optimize aircraft utilization and dramatically improve its flight punctuality record.

Another key move was the sale of the airline’s maintenance and engineering division in 2000 to Lufthansa Technik Philippines, a German-led joint venture. The spin-off has led to a more streamlined organization and enhanced productivity.

“We have begun to reap the fruits of our growth strategies. This has enabled PAL to perform above expectations despite the harsh operating environment,” said Zapanta.

PAL’s profit run in fiscal 2000-2001 was anchored on a strong operational performance.

Passenger revenue led the way with P31.18 billion as PAL carried nearly 5.75 million passengers on a fleet of 32 aircraft. Passenger load factor, the ratio of occupied to available seats, was 68.5% – better than the previous year’s 66.1%.

More importantly, revenue passenger kilometers (RPK), which tracks the volume of passenger traffic that actually earned money, reached 13.08 billion – overshooting last year’s level by 26% or over 2.7 billion RPKs.

PAL resumed services to four international destinations during the fiscal year – Sydney, Pusan, Taipei and Jakarta – expanding the network to 16 points in nine countries. (It has since added one more, Vancouver, and will add another, Ho Chi Minh City, next month.)

On the expense side of the ledger, PAL was not spared the inflationary spiral that hit the global airline industry last year. The flag carrier faced a tough time containing expenses as steep price hikes on major cost items were influenced by factors beyond its control.

However, expenses were adequately covered by the surge in revenues, enabling PAL to end the fiscal year with a net income of P436.5 million.

Said Tan: “We were faced with multiple challenges last year but this only served to bring out the best in our people. The PAL family, ably supported by our customers and partners in the industry, pulled together and showed that we were equal to the task.”