PAL Holdings profit drops 39% in 2016

MANILA, Philippines - Net earnings of the parent firm of flag carrier Philippine Airlines (PAL) declined 39 percent in 2016 from a year ago amid higher expenses.

PAL Holdings Inc. said in a filing to the Philippine Stock Exchange its net income reached P3.59 billion last year, down from P5.87 billion in 2015.

The company’s total comprehensive income likewise fell 39 percent to P3.95 billion last year from the P6.46 billion in 2015.

PAL Holdings said total revenue grew 7.2 percent to P116.63 billion in the previous year from P108.80 billion in 2015.

It said the growth in revenues was mainly due to the seven percent increase in passenger revenue to P96.29 billion in 2016 from the P89.89 billion a year earlier.

The company achieved higher passenger revenue as PAL carried a total of 13.4 million passengers last year, a 12.6 percent uptick from 11.9 million passengers served in 2015.

Last year, PAL’s total number of flights rose 8.5 percent as it introduced new destinations such as Kuwait, Jeddah, Doha and Saipan, as well as new services between Cebu and Los Angeles, Cebu and Singapore, Osaka via Taipei, Cebu and Caticlan, and Clark and Caticlan.

Total expenses, meanwhile, went up 7.8 percent to P110.88 billion in 2016 from P102.88 billion in 2015.

“The increase in expenses was attributable to higher maintenance, aircraft and traffic servicing, passenger service and reservation and sales, offset in part by the decrease in flying operations expenses,” PAL Holdings said.

Last year’s maintenance expenses increased to P15.04 billion from nearly P11 billion in 2015 mainly due to the increase in the number of engine overhauls.

The higher number of flights likewise resulted in higher aircraft and traffic servicing expenses particularly ground handling charges and landing and take-off fees.

Growth in passenger traffic and flights had the effect of bringing expenses related to passenger service to P10.20 billion last year, 18 percent higher than the P8.64 billion in 2015.