MANILA, Philippines — Flag carrier Philippine Airlines (PAL) sustained a 55-percent drop in its profit in the nine months to September, dragged by declining passenger revenues and spiking aviation costs.
PAL’s parent PAL Holdings Inc. reported yesterday that its net income fell by more than half to P6.76 billion between January and September, from P15.16 billion a year ago.
PAL was hit by a duo of financial setbacks that led to the profit slide, with its revenue slipping by two percent to P132.45 billion and expenses going up by nine percent to P120.09 billion.
The airline took a four-percent dip in its passenger earnings to P115.66 billion in the nine months to September, from P120.08 billion a year earlier.
PAL has flown 11.7 million passengers so far this year, signaling that air travel demand is well and steady.
However, PAL said the airline industry has seen a boom in seat supply to the point that it affected the yields of carriers.
Apart from this, costs of operating flights have increased during the period, and PAL said these expenditure hikes are dragging its profit.
PAL posted a nine-percent rise in flying expenses to P64.69 billion and a 12-percent increase in maintenance costs to P17.48 billion.
Between January and September, PAL’s maintenance spending rose as a result of the increase in aircraft checkup and engine repair necessary to serve the flight demand.
Moreover, the airline owned by the Tans invested at least P15 billion in capital expenditures, the bulk of which were spent on aircraft upgrades and cabin enhancements.
PAL also settled the pre-delivery payments for its order for nine Airbus A350-1000s. The initial batch of the order is expected to come in toward the end of 2025, and the aircraft will be used to reach long-haul destinations in North America and Europe.
PAL president and COO Stanley Ng believes the airline is treading the right path toward growth.
After all, PAL has managed to stay in the black for the 11th quarter in a row since coming out alive from its pandemic restructuring.
Recently, PAL has started mounting direct flights between Manila and Seattle, tightening its grip on the market demand for connections to North America.
“As the market conditions normalize, we are continuing to see moderation in growth and a more challenging business environment, where rising costs exert greater pressure on the economics of airline operations,” Ng said.