PAL Holdings Inc., the operator of legacy carrier Philippines Airlines, expects to revert to the black in 2019, as it implements cost-cutting measures throughout the year, including the reduction of its flights to destinations with low-value proposition.
Jaime J. Bautista, the company’s president, said his group expects to incur profits by yea-end, after posting a comprehensive loss of $65.87 million in 2018 due to spikes in fuel expenses and stiff competition.
“This year, we hope to improve our profitability by reducing flights to destinations where there is excess capacity like the Middle East. We are also looking at stopping flights to domestic routes, where we were not able to recover our expenses. We will implement strict cost-saving measures so that we will at least reduce expenses and be profitable this year,” he said during the annual stockholders’ meeting of the company on Thursday.
Bautista said the aircraft for these destinations with reduced flights will be used for wet leases, which essentially means the aircraft will be leased together with the crew, maintenance and insurance. They can also be used for charter agreements.
“These are ad hoc reduction in flights for us to maximize the utilization of the airplanes,” he said.
PAL aims to increase its average passenger load factor by as much as four points to 82 percent from around 78 percent in 2018.
Its new investor ANA Holdings can also help in turning the company’s bottom line around.
“There are many other areas in operations where we can collaborate, so we can benefit from the experience of ANA and vice versa,” Bautista said.
Ryuhei Maeda, a senior advisor at ANA Holdings, was elected on Thursday to PAL’s board.
In another development, the company approved the increase of its authorized capital stock from P13.5 billion to P20 billion to prepare for its impending share sale, which could be slated for next year.
“Hopefully, but we still don’t have a definite date. We just got the approval of the stockholders for the increase in capital stock so that we will have flexibility,” Bautista said. “This is just in preparation for a possible re-IPO [initial public offering].”
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