Philippine carriers warn of revenue pressures as profitability streak continues

Philippine Airlines and Cebu Pacific reported a drop in third-quarter earnings – despite seeing passenger volume growth – as they warned of “pressures” from falling yields and rising costs. Philippine Airlines reported an operating profit of $27m for the three months ended 30 September, down more than 79% year on year. The national carrier also saw its net profit decline - at $13m during the quarter compared to $98m a year ago. Philippine Airlines president Stanley Ng notes that the decline comes “as market conditions normalise”. “We are continuing to see a moderation in growth and a more challenging business environment where rising costs exert greater pressure on the economics of airline operations,” Ng states. The airline’s parent company, PAL Holdings, reported a 12% drop in third-quarter revenues to Ps41.5b ($705m), while expenses kept steady against the year-ago period, at Ps39.8b. Philippine Airlines carried 11.7m passengers for the first nine months of the year, up 6% year on year. The airline attributes the general revenue decline to “significant industry capacity growth”, which has impacted yields. As for Cebu Pacific, it saw a 1% dip in its third-quarter revenues to Ps23.1b, against a 14% increase in passenger numbers during the same period to 6m. The rise in passenger numbers was through “stimulation efforts” as a result of lower average fares, which fell 15% year on year.<br/>