Philippine Airlines Begins 2015 with $85 Million Profit

National flag carrier Philippine Airlines began the year with a positive start, posting a net profit of USD $85 million in the first quarter of 2015. The profit reflects continued prosperity at the carrier, which recently endured three consecutive years of losses including a USD $20.72 million net loss posted in the same quarter the previous year.

a330 philippine airlines
Copyright Photo: Angelo Agcamaran/PPSG
In spite of a transition in leadership from San Miguel Corporation to the Lucio Tan Group, PAL President Jaime Bautista has been able to maintain the positive turn around that was first established under San Miguel leadership.

"We need to consolidate and build on these gains to strengthen the foundation for future growth, aware that we operate in a very volatile environment," said Jaime Bautista, President of Philippine Airlines. "As always, we remain focused on our goal of transforming PAL into the airline of choice in all markets it serves."

In a statement released by the national flag carrier, it was revealed that the profit in the first quarter was a direct result of an increase in passenger traffic on new international routes and an expansion of the carrier's domestic network.

Earlier this year, Philippine Airlines reopened its Cebu hub and opened a number of new domestic flights including new service to Tablas, Romblon three times weekly. In addition, PAL restored service to New York on March 15. The four weekly flights operate via Vancouver, Canada.

Philippine Airlines served nearly 3 million passengers in the first quarter of 2015. Revenues in the first quarter rose 30 percent from P21.53 billion in 2014 to P27.98 billion in 2015. The carrier has been much more aggressive in its sales and marketing efforts, which it believes has helped to improve passenger yields.

Revenues at the carrier outpaced increased operating expenses, which are largely attributed to an increase in flight operations. Declining fuel costs helped to keep expenses under control with jet fuel dropping in price to US $83.28 per barrel in the first quarter of 2015 versus US $130.92 per barrel a year earlier.

Philippine Airlines has also continued with its fleet modernization program, transitioning to a modern fleet of fuel efficient aircraft. The improved fuel efficiency has helped the carrier to reduce its annual operating costs. In the first quarter of this year, PAL accepted delivery of two new A321 aircraft, while it retired four ageing A340 aircraft and two A330 aircraft.

In the last year, Philippine Airlines has optimised its operations transitioning its lucrative US routes from inefficient Boeing 747 aircraft to the modern Boeing 777, the new flagship aircraft of the fleet. In addition, PAL has increased flights to Honolulu, opened new service to Tokyo Haneda, and launched a number of new international routes from Cebu and Kalibo to Japan and South Korea.

37 comments:

  1. Finally a solid performance in just one quarter. Good job, PAL!

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    1. Good job to PALPAK airlines. *claps*

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    2. "Palpak" means failure right? Why? Philippine Airlines was just made a successful profit.
      Do not criticize your own national airline. Just be proud of them and help them to become a better airline.

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    3. Hopefully Ms Filipino Punk resides abroad like the USA so that she can express her deep emotional envy to PAL's recovering airline business. Most Pinoys are very supportive of PAL because they have a small heart with big chunk of charity and loyalty towards their fellow Pinoys. Can we be decent and polite, folks?

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  2. Too bad PAL is still using A340s to LHR and JFK. Maybe they should look into acquiring Malaysia's (newish) fleet of 777-200ers or barely used A380s for the U.S. West Coast. It's not like NAIA is going to have any new runways anytime soon if ever, either.

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    1. An A380 does not fit PAL's operations. Too big, no market for it. Also, if PAL acquires those second-hand B772s, it will cost more money on them to maintain. Rumors has it that PAL is going to be receiving 2 new Boeing 777-300ERs by the end of the year.

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  3. It's a good result but like many airlines its losses in previous quarters (not just the one referred to in the article) have been substantial, though not nearly as bad as Thai or Garuda to name two shocking performers.

    However PAL is still confused. On the Melbourne and Sydney routes, it uses modern A333s that lack in flight entertainment in economy class. The offer of an occasional iPad 'meant for business class' just won't cut it.

    PAL needs to order more B777-300ERs with IFE at seat for the Australian, UK, Canadian and USA routes to name some.

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    1. Blame the SMC management for configuring such aircraft. Jaime Bautista is even returning 5 of these mono class A330s. Perhaps to get them reconfigured?

      PAL may acquire 2 Boeing 777-300ERs by the end of the year.

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    2. Those who had the misfortune of flying on one of PAL's A330-300s were horrified and disgruntled of the experience.

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    3. PAL must be getting a lot of complaints from passengers who have flown on its 9-abreast 416 mono class seats A330-300s for all the torture and discomfort they've suffered on long-haul flights.

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    4. i tried PALEx flight of the mono-class A330, I think the seat pitch is ok for an hour fight but I bet it's horrible in the long-haul routes. Those 416-seater A330's are the visible mistake of SMC made during their "reign"

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    5. PAL has to move on from SMC. To begin with PAL and LT Team were not even included in Forbes 2000 top managed companies while RSA was included.

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  4. It's a good result but like many airlines its losses in previous quarters (not just the one referred to in the article) have been substantial, though not nearly as bad as Thai or Garuda to name two shocking performers.

    However PAL is still confused. On the Melbourne and Sydney routes, it uses modern A333s that lack in flight entertainment in economy class. The offer of an occasional iPad 'meant for business class' just won't cut it.

    PAL needs to order more B777-300ERs with IFE at seat for the Australian, UK, Canadian and USA routes to name some.

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  5. The profit was a result of the 60% drop in global fuel cost which accounts for a big percentage of PALs operation. The profit followed after a fortuitous economic event occurred (60% drop in fuel cost) of which PAL was a beneficiary along with Cebu Pacific and other airlines. In short, the result was expected.

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    1. So fuel drop its price,then why thai airways and garuda indonesia,singapore airlines are in red?!

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    2. Hedging. They had to honor short to medium term contracts where the price of their fuel was expensive.

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    3. @5/26/15 6:08 PM
      Singapore Airlines can never be "in the red".
      It is the airline with the second biggest capital to operate efficiently and effectively. I am not Singaporean or Chinese or Indian but I have flown SQ a lot of times in almost all of their routes to Asia, North America, Europe and you can see and feel the difference from flying with other so-called third world airlines. I do not care much about Thai International or Garuda; they have not matched SQ's caliber as of yet! Hopefully, they will in the future.

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    4. Did you know that FilAms are starting to "flock" to SQ flights from North America to the Philippines? My brother just found out last week that SQ's fares are the lowest you can find in the internet, so he wants to try flying the A380 and B777.

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    5. You are making a story.sq is bloody expensive as i check it on the internet....and beside it is circuituos and require back tracking and you will waste too much time.i done it before:L.A. to singapore via seoul,then connect another flight to manila.it takes more than 24 hours of travel time.the service is very good but i prefer pal 12 hours of boredom on boeing 777

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    6. The result is better than expected actually. Accordingg to a similar article from the Philippine Star, PAL spent 2.02 Billion PHP on aviation fuel. That means if aviation fuel costed the same as last year, the additional cost is still smaller than the profit. PAL is most likely to do better in the rest of the 2015 considering the 1st quarter is usually the lean months. Couple that with the fact that the Philippines was lifted to Category 1 by the FAA which will allow PAL to add more mainland US flights, PAL is in its best position I've seen in years. Mind you, CEB is not ready to fully capitalizing all these gains.

      PAL can finally have some rainy day cash, spend them on long-haul fleet modernization, slowly put back IFE, improve service, etc.

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    7. @ 7:49 PM May 8

      Do not go to the Singapore Airlines website as it is really "bloody expensive". Go to the countless cheap travel sites like One Travel, Kayak, Priceline, CheapoAir, Orbitz, EDreams, etc.
      SQ's present daily schedules:
      - LAX/TYO/SIN/MNL
      -SFO/HKG/SIN/MNL
      Do not get mad or force yourself into flying with SQ as this is just a suggestion in a decent and civilized open forum. But to check other options is very legal on a global scale! Keep smiling!

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  6. Let's put it like this: TG and GA are are like sosyal na mga botiques that are losing money and PAL is a supermarket that is keeping up in its pace. Can you get the analogy?

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    1. I disagree! Thai's airline market is very limited because there is no "brain drain" episode going on in Thailand unlike the Philippines which "exports" manpower to North America, Europe, Australia and even Africa. I have been to Thailand several times for tourism and I have seen prosperity in the people's faces, demeanors and commercial-minded ambitions. In other words, you do not see slums, poverty, beggars and homelessness compared to the other Asian countries. For Indonesia's Garuda, it has not been successful with its market even though it lists 107 destinations in Google but has cut almost 40 of those destinations because of poor business. Hopefully, it will change for the better sooner or later because it is now considered a 5-star airline by Skytrax. I am optimistic that this airline of the thickliest populated Islamic country in the world will be able to hurdle its present marketing and other issues.

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    2. I think TG's losses was also a result of political instability and turmoil causing tourists especially Europeans to look elsewhere while GA's load factors went haywire

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  7. Even if PAL operates like a supermarket, how much profit will PAL declare if the there was no 60% drop in global fuel cost? Without the fuel factor PAL will be declaring negative earnings.

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    1. the fuel price drop really did help PAL. Good thing PAL capitalized this opportunity.

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    2. PR has the youngest fleet of fuel efficient aircraft right now but for the leased A343 which they were able to save money on aviation fuel and mx. I hope they can capitalize their profits wisely.

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  8. Now if PAL could use the money they've saved up to buy next-gen planes such as 787s, A350s, or 777Xs.

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  9. PAL mentions that the European routes are suffering because of a lack of passengers. Its main reason is the time slots at London Heathrow. PAL chooses to land every flight at Heathrow in the evening. If PAL managed to get morning slots they would be able to connect with European destinations. Landing at London at 9pm restricts passengers. With 5 terminals connected by train the last flights leave around 11pm. Every old ex Iberia A340 would be full but PAL still hasn't seen sense.

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    1. Have PR considered using LGW or STN to get those precious morning slots instead of LHR evening arrivals.I remember during the 80's PR used to arrive at LGW..thoughts?

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  10. While I really appreciate PAL upgrading it's fleet from the old 747, a340 to 777-300ER and A330-300. I couldn't understand what was the mindset of the old SMB management that they chose to fit the planes to LOW COST CARRIER seats!? I'm no accountant but would they really have cost significantly more to install IFEs? Taking into consideration that these planes would be used for 10 years or so? For a 5-8 hour flight without IFE with 3-3-3 configuration is torture. Why couldn't PAL remove the old Recaro seats with IFE on their old B747-400 and install them on the a340 and a330? Is this possible? Help me out guys.
    However there are some things that I can commend on. In flight meal and service are both above average.
    PAL please improve otherwise you will be left behind by your competitors.

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    1. I can also see now that PAL's website for booking is competitive, i.e., you can book one way LHR/MNL with a very attractive fare. Then you can have another nice fare coming back to LHR (if you plan to fly again with PAL). Or if you want to have stopovers on the side, you can have lots of options coming back via Turkish Air and have a 2-day stopover in Istanbul; Cathay Pacific via HKG stopover or Thai Air via Bangkok stopover. Now you can see lots of options which would fit your travel plans, schedules, and you pay cheaper air fares. It is like flying USA to Rome via Dublin stopover on popular Aer Lingus of Ireland. Then come back via Lisbon on TAP Air Portugal!
      FilAms and travelers from North America, go see the world, folks....save some money for this once-in-a-lifetime experience.....Life is short, remember?

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    2. IFE systems cant be transferred from a 747 to an a330 or an a340. They are made specifically for an aircraft. These systems cost significant amount of money. There's a saying in the aviation industry, nothing comes cheap on aircrafts. A system can cost up to a quarter million to half million for a wide body aircraft. Im not sure what other airliners you have flown but PAL actually has good meals and service. Other airliners dont even serve meals and have very rude flight attendants especially in north america.

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    3. Hi Mr. Anonymous. I actually have flown different airlines. I was saying in flight mean and service were above average so I give PAL credit for that. I know LCCs like Southwest don't serve free meals on board. If you were to compare with the big three Delta, American , and United. Their long haul aircraft are all equipped with IFEs. It's just sad that PAL is now positioning itself with the Low Cost Carriers. Since they can't transfer, I hope that they get their new a330s and a321s refitted with IFEs soon.

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  11. Awesome news keep it up PAL. This means more jobs in the philippines.

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  12. Kudos to PAL for returning to profitability started by Ang. I hope they will use their profit wisely to improving their services.

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