PAL seen returning to profitability next year

MANILA, Philippines — Flag carrier Philippine Airlines (PAL) is expecting its return to profitability happening next year instead of this year, but the company hopes to see losses trimmed further by yearend.

 “So far, it’s not that promising,” PAL vice chairman Lucio “Bong” Tan Jr. said when asked about the airlines’ target of swinging back to profitability this year after two consecutive years of net loss due to high operating costs and stiff competition.

“So give us probably six to eight months, we might find good results,” he said.

By yearend, however, Tan said PAL is hoping losses would be less than that of last year. “Because every rehabilitation gets ugly first before it gets better,” he said.

“Revenue is actually going up. We just have to look into the cost. The cost is also going up. There might be a lot of inefficiencies inside the group. The group has been very administration heavy. There are a lot of inefficiencies there. So we have to maybe start doing synergies,” Tan said.

Tan said PAL is keen on outsourcing as well as beefing up further its IT department.

He said the company is also engaging Lufthansa consultants, a group which has been doing a lot of successful turning around of airlines.

“We have to learn from other airlines. New partner (ANA Holdings) can give us some help also. I heard other airlines are doing half of their ticket sales from website. Ours is still under 20 percent. So those are the immediate steps. There are a lot of low-hanging fruits there, so we have to address that,” he said.

Former PAL president and chief operating officer Jaime Bautista, who retired in June, earlier said the airline is eyeing to return to profitability this year after managing to trim its losses last year.

The last time PAL finished a year profitable was in 2016, despite net earnings falling 39 percent year-on-year then.

By 2017, its parent firm PAL Holdings Inc. reported that it incurred a net loss of P7.3 billion from a P4.13 billion profit the previous year on higher expenses.

PAL’s net loss was further reduced to P4.33 billion in 2018.

PAL is currently undergoing a transition period following the retirement of Bautista, a long time president and COO of the airline.

Last week, PAL appointed Gilbert Santa Maria as its new president and COO. The airline also recently appointed two key executives who will lead the airline’s commercial and human resources groups, namely Eugene Go as PAL chief commercial and marketing officer and Rosemarie Katalbas as senior vice president of Human Capital Department.