The FINANCIAL -- PAL Holdings, Inc., the parent company of flag carrier Philippine Airlines, on April 20 reported total comprehensive income of P786.8 million for 2014, a remarkable achievement that snapped a three-year losing streak and puts the company on a path to sustained growth.
In a report filed with the Securities and Exchange Commission, PAL Holdings said that though the surplus was largely in line with internal projections, it still represented a dramatic turnaround from the huge P9.12 billion loss incurred in the last nine months (April to December) of 2013, according to PAL.
In 2013, PAL Holdings shifted its accounting period from a fiscal year basis that starts in April and ends in March, to a calendar year standard. This resulted in a shorter reporting period of nine months for 2013.
The annual profit was PAL Holdings’ first since fiscal year 2010-2011, when it booked P3.1 billion.
The next three years then saw the company grappling with industrial unrest at PAL, triple-digit fuel prices, major natural disasters in key international and domestic markets, and heightened competition. These resulted in combined losses of P20.56 billion from 2011 to 2013.
However, the 2014 results revealed a stellar performance by PAL Holdings on the core operating front. Operating revenue jumped to P100.9 billion as passenger carriage soared and yields improved, leading to an operating profit of P2.37 billion – reversing the operating loss of P5.51 billion in 2013.
Passenger operations was the main driver, with PAL ferrying 9.6 million passengers on 73,685 flights during the year, for an average load factor of 71.4%.
Revenue passenger kilometers (RPK), the industry’s most common measure of demand, topped 24.8 billion. Available seat kilometers (ASK), which measures capacity, reached 34.8 billion.
As a result, passenger revenue vaulted to P81.75 billion in 2014.
Cargo contributed P7.84 billion in revenue, as 162 million kilograms were lifted in 2014, outstripping the 94.3 million kilograms carried in 2013.
On the other side of the ledger, expenses likewise surged to P98.6 billion as PAL added 19 aircraft, 11 of them wide-body jets, in 2014.
Notwithstanding the easing of global prices starting June 2014, jet fuel remained PAL Holdings’ single biggest expense item, accounting for P38.8 billion.
The turnaround may be attributed to the aircraft fleet rationalization in line with market growth, retirement of 16 ageing wide body aircraft in 2014 which reduced PAL’s fleet age from over 10 years to 3.6 years. The new fleet addressed major cost items — fuel and maintenance, which together historically amounted to 55%-60% of costs; the upgrade of the Philippines from Category 2 in 2014 allowed the deployment of PAL’s B777-300ER fleet on key trans-Pacific routes to the US and led to improved product and operational efficiencies; and continued partnerships with Etihad in the Middle East, ANA in Japan and Westjet in Canada and other airlines for codeshare relationships
“Our encouraging performance in 2014 signals that PAL has now turned the corner,” said Jaime J. Bautista, president of both PAL Holdings and PAL. “We need to consolidate and build on these gains to strengthen the foundation for future growth, aware that we operate in a very dynamic environment. As always, we remain focused on our goal of transforming PAL into the airline of choice in all markets it serves.”
PAL continues to expand its market with the introduction of New York last March 2015 and Jingjang in April 2015. In the domestic front, PAL recently launched Tablas and new intra-domestic routes linking Cebu and Cagayan de Oro, Davao, Butuan, Tacloban, Iloilo and Bacolod. New flights also link Iloilo and General Santos as well as Zamboanga and Davao. The new routes were re-established to bridge key points within and across various regions.