PAL Admits Financial Trouble, Five-star and Expansion Plans in Jeopardy

The Philippine's flag carrier is about to enter its 80th year in the aviation industry with an admission that it is facing serious financial troubles.  A letter by Philippine Airlines (PAL) President and COO Gilbert Sta Maria  has circulated to staff that says that the company has suffered a net loss of US$208 million (€187 million, £163 million) in  fiscal year 2019.  If confirmed by official securities filings, it will mark the third straight year of losses the flag carrier has faced.  Sta Maria has cited "unsustainable" debt and leasing obligations amounting to "billions" of dollars.  

Image source: Dk97phil/Wikimedia

He has also noted that the recent Corona Virus outbreak and Taal Volcano eruption have made the company's financial situation worse but it is unclear whether these events were factored in to the reported figures, thus highlighting the chronic and structural factors contributing to the losses.  PAL's fiscal year ends on March 31.    

Sta Maria has said that PAL management is addressing the situation.  It is unclear what the long-term impact on this will be on the carrier's plans to open new destinations, acquire new aircraft, and become a five-star carrier but in the short to medium term, the biggest impact will be felt in the realm of staffing levels.  The carrier has started to carry out a retrenchment programme whereby at least 300 staff (or five percent of its workforce) will be affected.  Sta Maria further added that the comapny is looking to "generate more revenue by increasing yields and loads and by optimizing [its] network; create more revenue streams in ancillary products like cargo, loyalty programs and charter operations, and drive a digital transformation for greater efficiency and reliability."  As for other cost-cutting measures, Sta Maria identified the need for “reduced maintenance, repair and overhaul, and ground operations costs, including catering; reduce spending for key commodities such as fuel and services, and an organization restructured for greater efficiency and effectiveness with increased utilization, simplified processes, greater scale and investment in automation.”

PAL is no stranger to financial problems.  In 1998, the carrier was forced to close operations for several weeks after experiencing financial losses partly as a result of a labour dispute and the then-ongoing Asian Financial Crisis.  

PAL is also not alone in experiencing recent financial trouble.  Hong Kong flag carrier Cathay Pacific has suffered two straight years of losses in 20016 and 2017 before making a profit in 2018.  That carrier has had to institute staffing cuts at its foreign posts.  However like PAL, Cathay has recently suffered the impact of the Corona Virus and 2019 Hong Kong protests forcing it to offer unpaid leave to 27,000 of its staff and capacity cuts of 1.4%.  Cathay also had to suspend and delay flights to/from Manila in the midst of the Taal Volcano outbreak.


  1. you wont be missed Pal. your bad customer service, failing to cancelling tickets to volcano activity islands where other airlines cancel and refunded their customers. not auctioning business class properly to economy that goes empty, taking advantage of the Filipino flag making people think its the airline for the filipino people. Airline is a disgrace. This Airline been paying senators to stop competition like United Airlines from entering that would have given better value to those flying between Canada and the United States. its time to say Goodbye to Philippine Airlines.


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