THE operator of legacy carrier Philippine Airlines (PAL) is cleaning up its books from last year, seeking an approval from the Securities and Exchange Commission for an equity restructuring to partially remove its multibillion-peso deficit.
In a disclosure to the local bourse, PAL Holdings Inc. said it has requested for the use of the company’s additional paid-in capital of P25.34 billion in 2017 to “partially wipe out its deficit” of P29.07 billion last year.
Company officials have yet to respond to queries as of press time.
Luis A. Limlingan, business development head at Regina Capital Development Corp., noted the restructuring initiative may have been borne out of the company’s fleet modernization program.
“This must be timely since the airline is modernizing their fleet, to fend off competition from main rival Cebu Pacific. Also, they are trying to expand their route which requires a bigger fleet to cater to longer distances,” he said.
The full-service airline has on its books, a firm order of six Airbus A350s (one of the larger airliners in the world), six Airbus A321s and five Bombardier Q400s. Combined, the said jets are priced at roughly $2 billion.
Limlingan said another factor to the equity restructuring program is the continuing rise of jet fuel prices in the global market.
“Fuel costs are also weighing heavily on the airline, as they can account from 50 percent to 65 percent of operating expenses depending on the price of oil,” he said.
Jaime J. Bautista, the carrier’s president, has said the group may incur an additional expense of over $143 million (P7.522 billion) for 2018 due to increasing fuel costs.
Fuel costs drove the carrier’s bottom line in 2017 to a comprehensive net loss of $129 million. Volatile fuel prices in the global market amounted to $749 million for the carrier, a $200.1-million increase from $549 million in 2016.
Fuel accounts for over 60 percent of the expenses of carriers.