Summary
- Passenger demand is rising with airlines like Philippine Airlines seeing a 13.6% increase in volume.
- Despite a drop in profits, Philippine Airlines is on track with growth strategies and expanding its routes.
- The airline is investing in new A350-1000s for nonstop flights to North America, showing commitment to customer comfort.
The COVID-19 pandemic put many of Asia’s long-established carriers through the proverbial wringer, but somehow they survived through some flexible financial schemes and bailouts and are now consolidating their way out of years of very tough times. Airlines like Thai Airways, AirAsia, Garuda Indonesia and Philippines Airlines are bouncing back, although profits have taken a hit for the Manila-based carrier.
Passenger demand is settling
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Philippine Airlines is the flag carrier of the Philippines and is based at Ninoy Aquino International Airport (MNL) in Manila.
On Friday, flag carrier Philippine Airlines released its result for the three months ended March 31, 2024. In the first quarter (1Q24), the airline generated consolidated revenues of $826 million, a 6% improvement year-on-year (YoY), mainly driven by a 13.6% in passenger volume.
Photo: Phuong D. Nguyen | Shutterstock
The full-service airline carried 3.86 million passengers in the first quarter this year compared to 3.40 million last year and increased passenger revenue to $721 million, a 5% increase over the $686.2 million it earned in 1Q23. However, that good news was tempered by the 25% drop in total comprehensive net income, which fell to $81 million, while operating income fell YoY by 12% to $118.4 million.
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PAL said the profit drop was an expected outcome and attributed it to normalizing global travel demand as traffic settles in the post-pandemic era. Operating expenses rose by 13% in 1Q24 from increased flying activity and continued industry-wide price hikes on services, including maintenance, ground handling, passenger service and airport charges.
New A350s are on the horizon
President and Chief Operating Officer Stanley Ng said PAL is particularly pleased with the strong reception that the Manila-Seattle route has been generating since it was announced last month, adding:
“Our positive bottom line confirms that we are on track with our growth strategies, in the areas of fleet growth, route network expansion and service innovations. However, supply chain issues remain and continue to put a strain on our operations, but we are determined to address these challenges.”
The airline also reported capital expenditures reached $73 million for pre-delivery payments on Airbus A350-1000s, which it ordered in 2023, and other aircraft-related requirements. PAL has signed a memorandum of understanding to acquire nine Airbus A350-1000 long-haul aircraft to operate nonstop flights to the US and Canada while also considering services to Europe.
Photo: Airbus
At the end of the quarter, PAL reported a fleet of 86 aircraft, with just one Boeing 777-300ER joining service under an operating lease. PAL owns two Airbus A320-200s, three Bombardier DHC 8-400s and four Bombardier DHC 8-300s. The balance of the fleet is leased and from Airbus, it includes 13 A320-200s, 22 A321-200s, eight A321neos, 11 A330-300s and two A350-900s, supplemented by 10 Boeing 777-300ERs and 11 Bombardier DHC 8-400NGs.
Surprisingly, Philippine Airlines is the only airline operating nonstop flights between the Philippines and North America, so the upgrade to the comfort of the new A350-1000s will be a pleasant surprise for its customers. The airline also has the largest network of routes and flights from the Philippines to the Middle East, Australia and Japan.
Have you been on a Philippine Airways flight recently? Let us know in the comments.
