The Centre for Asia-Pacific Aviation said the outlook for Philippine Airlines has improved after the deferral of aircraft delivery and lower fuel prices.
“The return to profitability in 2014 and first quarter of 2015 are mainly a reflection of lower fuel prices and improved market conditions, driven by consolidation and a new more disciplined approach to capacity in the Philippine airline sector,” CAPA said in a report.
PAL posted a comprehensive income of $85 million in the January-March period this year, a reversal of the $20.7-million net loss booked in the same period last year.
PAL said revenues grew 30 percent in the first quarter to $627 million from $482.4 million a year ago, supported by an increase in passenger traffic.
PAL Group also has made strategic and capacity adjustments since Lucio Tan took back control of Philippine Airlines and sister regional carrier PAL Express in late October last year.
The Lucio Tan Group bought back the 49 percent stake in flag carrier it sold to San Miguel Equity Investments Ins. at a cost of $1 billion.
“Lucio Tan has slowed PAL’s fleet and network expansion. Five of the 10 A320 deliveries which were initially slated for 2015 have been deferred, enabling PAL to avert a potential return of overcapacity in the domestic and regional international markets in the second half of 2015, CAPA said.
PAL earlier said it bought two new Airbus jets, as a part of a plan to increase its outstanding orders for single-aisle aircraft to 40 over a 10-year period or from 2015 to 2024.
CAPA also said all Philippine carriers had benefited from consolidation in the domestic market, driven by the capacity reductions at the PAL Group, the Philippines AirAsia-Zest partnership (which should eventually result in the two carriers merging) and Cebu Pacific’s acquisition of Tigerair Philippines, which was recently rebranded as Cebgo.
“The consolidation has resulted in only three players competing on domestic trunk routes compared to as many as six in 2012,” it added.
CAPA said domestic yields and load factors improved significantly across all Philippine carriers in 2014, boosting profitability of the Philippine airline sector.
As CAPA previously highlighted, the Philippines was the only market in Southeast Asia which saw an improvement in profitability in 2014.
