MANILA - Flag carrier Philippine Airlines (PAL.PS) officially reported to the Philippine Securities and Exchange Commission (SEC) a total comprehensive losses of $219.86 million for the period ending December 2008.
In a financial statement submitted yesterday, the airline attributes its actual and mark-to-market losses from its fuel hedging contracts.
Philippine Airlines is the latest in a string of Asian airlines to disclose losses relating to fuel hedging at $ 219 million. Last week, Singapore Airlines revealed $225 million losses on hedging. Air China, China Eastern, Cathay Pacific, Shanghai Airlines and Thai Airways have all also flagged up mark to market losses. A Merrill Lynch report predicts nine Asian carriers will report $3.8 billion in estimated losses from contracts tied to fuel hedging in 2008.
PAL in a statement said that it expects better fourth quarter results as it takes advantage of lower fuel prices in the world market.
PAL’s total expenses for the quarter rose by 58 percent from last year to $586.96 million. Fuel continued to be the company’s top operating expense but PAL succeeded in controlling other expenses and keeping them in check. The company already delayed the delivery of its new Boeing 777-300ER aircraft to November this year and deferred the refurbishment program of its 4 Boeing 747-400 this year to save cost. It was originally scheduled to be done last year. The airbus 340 refurbishment program was also deferred for one year. It was supposed to be done this year. It is unlikely to announce new widebody orders until the end of the year.
The airline also announced that it has no plans of grounding their planes amidst the recession even if other airlines started doing so. Singapore Airlines and Qantas recently announced grounding their aircraft due to poor loads.
Philippine Airlines instead joins Emirates Airlines in expanding its capacity this year by adding frequency to its domestic and international network. In fact, the airline is scheduled to take delivery of additional aircraft as part of its refleeting program. It intends to fly double Daily to Los Angeles by November.
The International Air Transport Association(IATA) estimated that airlines lost a total of $5 billion in 2008 brought about by both the slowing global economy and the unprecedented volatility of fuel prices. It also said that some carriers were unlikely to reap the full benefit of the drop in fuel prices until 2010.The airline industry may lose as much $2.5 billion this year as traffic declines, with carriers in the Asia-Pacific region accounting for almost half of the deficit.