By EMMIE V. ABADILLA
After incurring losses to the tune of ₱10.6 billion in 2019, Philippine Airlines (PAL) has to hurdle more financial challenges this year, after flight disruptions from the Taal Volcano eruption and now, the corona virus outbreak, on top of its unsustainable long-term borrowings and lease obligations.
Parent firm, PAL Holdings Inc., was in the red by ₱4.3 billion in 2018 and ₱7.3 billion the year before.
In order to survive, the flag carrier “needs to find a way to profitability, reduce its debt and achieve a higher level of competitiveness,” according to president and COO Gilbert Santa Maria.
They are currently “working on turnaround initiatives to strengthen revenue generation and manage costs.”
Already, PAL is streamlining its 6,087 workforce, beginning with 300 separated this month.
The flag carrier, which is marking its 75th year this year, is also increasing its authorized capital stock from ₱13 billion to ₱30 billion, to buy time and bolster its debt position.
And of course, PAL continues its search for a strategic investor.
A couple of factors beyond its control made the situation worse for PAL – the closure of its Manila hub during the Taal Volcano eruption last January and the ongoing COVID-2019 crisis that shut down all its flights to mainland China, Hong Kong and Macau.
To offset the losses, PAL should haul in more revenues by boosting yields and loads via optimizing its network, aside from creating more revenue streams in ancillary products like cargo, loyalty programs and charter operations, and driving a digital transformation for greater efficiency and reliability.
“We need a comprehensive and aggressive approach to managing our costs,” according to Sta Maria.
Hence PAL has to trim down costs of maintenance, repair and overhaul, ground operations as well as catering.
It should also cut spending for key commodities such as fuel and services.
Needless to say, PAL has to restructure its entire organization for greater efficiency, simplify processes and invest in automation.