PAL Holdings Inc. said Thursday it plans to reduce unprofitable domestic routes and capacity in the Middle East to improve profitability in 2019.
“We are losing money for the last two years because of the high operating costs and very stiff competition. There is excess capacity right now where we operate,” PAL president and chief operating officer Jaime Bautista told reporters after the company’s stockholders meeting.
“This year, we hope that we will able to improve our operations, our profitability as we are managing the capacity. We will reduce flights to destinations where there is excess capacity like the Middle East. We will also stop flying to some domestic routes where we are not able to recover all our expenses,” he said.
Bautista said PAL would also implement strict costs savings measures to reduce expenses and be profitable this year.
PAL Holdings incurred a comprehensive loss of $65.78 million in 2018, down from $129-million losses in 2017. Revenues went up to $2.92 billion last year from $2.62 billion in 2017 while expenses increased to $3.06 billion from $2.76 billion.
PAL Holdings filed an application for an increase in its authorized capital stock from the current P13.5 billion to P20 billion to support the ongoing network and fleet expansion initiatives to position the airline as a strong market player.
“This is in preparation for a possible re-IPO because for us to be able to do that, we’ll have to prepare a prospectus. We’ll have to prepare all the terms and conditions of the IPO. So we’ll have to appoint a financial adviser to help us,” Bautista said.
He said that the company planned to hold a re-IPO next year.
PAL Holdings tapped Ryuhei Maeda, a senior advisor at ANA and member of the board of Japanese carrier All Nippon Airways Co. Ltd. as a new member of the board of directors of PAL.
He represents ANA Holdings Inc., the parent company of ANA which acquired 9.5-percent shares in PAL Holdings on Jan. 29, 2019.
ANA HD, the Japanese parent company of All Nippon Airways, is investing $95 million for a 9.5-percent stake in PAL Holdings.
ANA HD would acquire the shares from Trustmark Holdings Corp. which is owned by the family of billionaire Lucio Tan and is the largest shareholder of PAL Holdings. This will increase foreign ownership in the company from 8.77 percent to 18.27 percent.