PAL IS SLOWLY RECOVERING AS FUEL COST DECREASES | Marvin Germo

PAL IS SLOWLY RECOVERING AS FUEL COST DECREASES

By: Marvin Germo | May 13, 2019

After A Challenging Year

2018 has been a challenging year for the local airline companies in the country, including PAL and Cebu Pacific. Good thing the first three months of 2019 have brought opportunities for these airlines to recover and have their passenger volume grow. During the first quarter of the year, PAL Holdings, Inc. was able to cut down its net losses from P1.11 billion to P383.17 million. The loss is still there, yes, but we can’t ignore the fact that the resilience of the company is a big factor why they are slowly recovering. Let’s take a look at some major key points that happened during the first three months of the year.

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Lower Flying Expenses

One major reason why PAL was able to trim down its losses is due to the decreasing fuel costs. There was a lower flying expense recorded because the jet fuel price is declining. And since the passenger volume increased, it turned out great for PAL having higher revenue and lower expenses. Partnered with lower expenses is the consolidated revenues of the airline company that went up by 7.2% or P39.27 billion in figures. It was also disclosed that the increase in passenger volume was because of the new routes and extra flight frequencies. For investors, it is surely great news to hear PAL recovering from more than a billion loss in 2018.

Expenses During Q1 2019

Following the consolidated revenue of PAL, the consolidated expenses dropped by 3.4% during the first quarter of the year. The expenses stood at P36.81 billion, which was lower compared to the P19.82 billion reported last 2018. The flying expenses were still the largest contributor to the firm’s expenditures. Additional to this is the reservation and sales costs that grew up by 17.9% or P444.41 million due to the increased credit card services fees and booking charges. It seemed like more passengers used credit cards to avail the services of PAL. Maintenance fees also jumped by 8.2% or P5.12 billion because of the new aircraft that arrived in the second quarter of 2019.

PAL During 2018 Vs. 2017

Compared to the 2017 net loss of P7.334 billion, PAL Holdings Inc. Slimmed its 2018 net loss to P4.330 billion, which was 41% lower. This was due to the fact that the known airline served about 16 million passengers in 2018. Though it generated higher revenues, the net loss couldn’t be lifted enough to make a positive result due to some major reasons. Of course including the fuel costs. A major inclusion in the flying operation cost last 2018 was fuel. The consumption of fuel grew by P13.9 billion, making a P52.3 billion expenses from P38.4 billion in 2017. The escalated jet fuel price with an average of $94.38 per barrel in 2018 affected the fuel expenses.

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