The operator of Philippine Airlines said over the weekend net income fell 28 percent in the first quarter, as expenses grew faster than revenues amid volatile exchange rate.
PAL Holdings Inc. said net profit reached P2.71 billion in the January-to-March period, up from P3.78 billion registered in the same period last year.
Revenues rose 4.1 percent in the first quarter to P29.12 billion from last year’s P27.98 billion.
PAL Holdings attributed the increase in revenue to the depreciation of Philippine peso, which averaged 47.27 per US dollar in the first quarter from last year’s 44.42 per greenback.
The company said if the exchange rate had remained at the 2015 level, total revenues would have decreased by P609.6 million.
Passenger revenues rose to P24.65 billion in the first quarter from P23.09 billion in the same period last year. Cargo revenues fell 31 percent to P1.47 billion from P2.14 billion.
Expenses in January to March grew 6.2 percent to P26.2 billion from P24.7 billion last year.
“The increase was also brought by the effect of the peso-dollar exchange rate fluctuations,” PAL Holdings said.
It said if the exchange rate had remained at the 2015 level, total expenses would have decreased by P57.6 million.
Flying operations expenses declined P462.3 million to P14.09 billion, attributable mainly to lower fuel costs. Fuel price dropped to an average of $60.87 per barrel in the first quarter of 2016 from $89.91 in 2015.
PAL operated more international flights in the first quarter, increasing aircraft and traffic servicing cost by 23.2 percent to P3.41 billion over the year ago level of P2.77 billion.
PAL, now wholly-owned by tycoon Lucio Tan after he bought back a 49-percent stake that San Miguel Corp. purchased from him in 2012, signed a memorandum of understanding in February with Airbus for the acquisition of six A350-900 aircraft with the option for another six for delivery in the years 2018 to 2019.
The acquisition of six Airbus A350 was valued at $1.83 million.
PAL plans to deploy the A350 extra wide-body, which seats more than 300, on new routes to North America and Europe. The first A350 is scheduled to be delivered in 2018.
A350 is the world’s latest generation airliner, featuring the most modern aero-dynamic design, carbon fiber fuselage and wings. With the Trent XWB engines, A350 operates at 25 percent less fuel burn and emissions, significantly lowering maintenance costs. The extra-wide cabin provides passengers more personal space in all classes.