PAL profit dives in first 3 months

Agence France-Presse

Posted at Aug 20 2010 07:18 PM | Updated as of Aug 21 2010 03:18 AM

MANILA, Philippines - Philippine Airlines on Friday posted an 11 percent fall in net profit for the first 3 months of the fiscal year as rising costs offset strengthening passenger demand.

The results added to PAL's woes as its attempts to return to profit the year to March have been hit by a looming strike and several pilots leaving for higher-paying airlines.

The company said it made a $31.6 million profit in the April-June period, down from $35.5 million in the same period last year.

"PAL must swallow bitter pills and handle its labor issues with utmost care to survive amidst the difficult and cut-throat operating environment," an airline statement quoted its president Jaime Bautista as saying.

Despite encouraging numbers from the peak travel season in its fiscal first quarter, PAL said it expects lower passenger volumes in its traditional lean season between August and November.

The airline said first quarter revenues rose 30% from a year earlier to $426.7 million thanks to improvements in passenger and cargo traffic, which it equated with signs of global economic recovery.

However, expenses surged 37% to $391.6 million.

The cost of jet fuel, its biggest operating expense, rose $55 million as fuel prices soared to $107.47 per barrel from $70.28.

Bautista said PAL will pursue efforts to generate more revenues and control costs.

PAL said it suffered a 14.4 million-dollar net loss in the fiscal year to March 2010 despite posting a profit in the first three months.

PAL's cabin crew on Tuesday declared they would go on strike over demands for higher pay, though the actual date has not been announced.

The national carrier is already struggling from the abrupt departure last month of 25 pilots to higher-paying jobs abroad, which Bautista said would mean the carrier will post another loss in the current fiscal year.

The pilot shortage, which remains unresolved, caused PAL to axe some routes.