Bigger gains seen for carriers as volumes rise

LOCAL airline companies are expected to post higher second-semester earnings, an analyst said, pointing to the expected recovery of domestic and international passenger and cargo volumes.

“The main catalyst would be the further recovery of domestic and international passenger and cargo volume as the economy reopened towards greater normalcy,” said Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort in a Viber message.

He said the airlines are on the right recovery path towards  “pre-pandemic levels or eventually higher.”

For the April-to-June period, PAL Holdings, Inc., the listed operator of flag carrier Philippine Airlines, posted an attributable net income of P6.23 billion, more than double the P2.47 billion in the same period last year, driven by higher revenues.

The company’s gross revenues for the second quarter expanded by 34.1% to P45.24 billion from P33.74 billion in the same period last year.

Cebu Air, Inc., the listed operator of budget carrier Cebu Pacific, reported a profit of P2.67 billion in the second quarter, turning around from the P1.89-billion net loss incurred in the same period last year, after a significant boost in passenger revenues.

From April to June, the company reported P22.67 billion in gross revenues, marking a 62.3% increase from last year’s P13.97 billion.

Passenger revenues, totaling P15.84 billion, constituted the majority of Cebu Air’s second-quarter top line, reflecting an 86.3% increase compared with last year’s P8.51 billion.

Meanwhile, the company recorded a 49.7% decline in cargo revenues, which amounted to P866.9 million, down from P1.72 billion in the same period last year.

Throughout the quarter, the company transported 5.46 million passengers, 29% higher compared with the previous year.

“Offsetting risk factors would include higher fuel prices with global crude oil prices near 10-month highs recently after oil production cuts by Saudi Arabia and Russia, among the world’s largest oil producers, since fuel accounts for a large share of the cost of airlines,” Mr. Ricafort said.

In a report last month, the Civil Aeronautics Board (CAB) said that it had raised the passenger and cargo fuel surcharge rate for this month, after keeping it at level 4 for three consecutive months or from June to August.

CAB announced that the applicable fuel surcharge for domestic and international flights was raised by two levels or to Level 6.

“Higher inflation that is added to operating cost and eats into profit margins, also added to cost of imported capital and inputs such as aircraft, parts, maintenance, fuel, among others,” he said.

In August, headline inflation rate quickened to 5.3% from 4.7% in July, but slower than the 6.3% clip a year ago. Last month’s rate is still within the Bangko Sentral ng Pilipinas’ 4.8-5.6% forecast range for the month. — Ashley Erika O. Jose

Bigger gains seen for carriers as volumes rise
Philippines Pandemic