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 $27 million for the three months ended 30 September, down more than 79% year on year.
The national carrier also saw its net profit decline - at $13 million during the quarter compared to $98 million 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 Ps41.5 billion ($705 million), while expenses kept steady against the year-ago period, at Ps39.8 billion.
Philippine Airlines carried 11.7 million 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 Ps23.1 billion, against a 14% increase in passenger numbers during the same period to 6 million. The rise in passenger numbers was through “stimulation efforts” as a result of lower average fares, which fell 15% year on year.
The low-cost operator reported an operating profit for the July-September quarter of Ps2.4 billion, down from the Ps2.6 billion profit a year ago.
For the nine-month period, Cebu Pacific saw a 8% dip in its operating profit to Ps5.7 billion, with an 11% rise in revenues to Ps74.5 billion.
“The margin pressure was driven by increased expenses in relation to the airline’s investment in additional aircraft and engines,” says Cebu Pacific, which added 10 aircraft and 10 spare engines during the period to buffer against operational challenges.
