PAL trims losses in first half

MANILA, Philippines — Flag carrier Philippine Airlines trimmed its losses in the first semester amid the challenges brought about by the pandemic.

In a stock exchange filing, PAL parent PAL Holdings Inc. reported a net loss of P16.56 billion in the first half, a 20 percent reduction from the P20.75 billion net loss incurred in the same period last year.

The company recognized other comprehensive loss amounting to P1.48 billion during the six-month period, which was mainly due to unfavorable effect of foreign exchange translation.

This brought PAL Holdings’ total comprehensive loss to P18.04 billion in the first half, down by 18 percent from last year’s P22.02 billion.

The company’s consolidated revenues during the period plunged by 51 percent to P18.04 billion from P36.82 billion on the back of the continuing impact of the COVID-19 pandemic to passenger operations.

PAL Holdings, however, saw its operating expenses decrease by nearly 49 percent to P26.83 billion from P52.16 billion as a result of the significant reduction in the number of flights operated.

The company said manpower costs also declined as a result of its retrenchment program in mid-March.

PAL said expenses related to grounded aircraft, which were recognized this year under other charges, also contributed to the decrease in operating expenses.

Consolidated total liabilities of the company went up to P300.93 billion due to the increase in notes payable as a result of additional short-term loans.

PAL has revised its aircraft delivery schedule to align with the forecasted recovery of travel demand, with 2020 and 2021 aircraft deliveries postponed and rescheduled for delivery in 2026 to 2030.

PAL said it has returned two aircraft to its lessor last month.

As of end-June, PAL’s fleet stood at 95, 15 of which are owned and 80 under lease.

“The group’s liquidity situation became more critical in 2020 and 2021 due to severely weak passenger sales and revenue as an adverse effect of the COVID-19 pandemic,” PAL said.

“The COVID-19 outbreak and the measures taken by the Philippine and foreign governments have caused disruptions to PAL’s passenger operations, resulting to temporary suspension and limited operations of its flights both for domestic and international routes,” it said.

PAL said the decline in revenue and cash inflows due to the pandemic has put significant strain on the group’s liquidity position and on its compliance with certain loan covenants.

Due to the difficulty in sourcing additional financing, the company said it is embarking on a financial restructuring plan to ensure the group’s business continuity.

PAL said it has drawn on bridge funding from its major shareholder, deferred payments through the forebearance of lessors, lenders and suppliers, carried out a retrenchment program and implemented cost-cutting measures.

PAL earlier said it is considering to file a pre-negotiated court-rehabilitation in an overseas jurisdiction as part of its financial restructuring.