PAL Reports $20.4-M Profit - Airs Concern on PHL-UAE Talks

Philippine Airlines turnaround in income

Philippine Airlines' (PAL) $20.4 million total comprehensive income for year 2014 was formally reported by management to shareholders during today's (August 27, 2015) annual stockholders meeting.

The modest but significant financial performance snapped a three-year losing streak and represented a dramatic turnaround from the huge $229.7 million loss for the period April-December 2013.

Due to a favorable industry climate, the turnaround had been sustained through 2015 with PAL posting a $138-million net income for the period January-July 2015.

During the stockholders meeting, the following were elected to the PAL Board of Directors: Lucio C. Tan - Chairman & Chief Executive Officer; Jaime J. Bautista - President & Chief Operating Officer; Joseph T. Chua, Heinrich T. Khoo, Manuel M. Lazaro, Atty. Estelito P. Mendoza, Washington Z. Sycip, Carmen K. Tan, Lucio K. Tan, Jr., Michael G. Tan, Atty. Florentino M. Herrera III; Independent directors - Antonino L. Alindogan Jr., Johnip G. Cua, Jose Rizalino Acuzar and Gregorio T. Yu.

Completing the board are Atty. Marivic T. Moya as corporate secretary, and Marlo V. Tagle as compliance officer.

The stockholders also approved the appointment of SyCip, Gorres, Velayo (SGV) as external auditors.

PAL later briefed media of the carrier's apprehension at the ongoing air talks between the Philippines and the United Arab Emirates, that may have pernicious consequences on PAL's investments in launching new routes to the Middle East, Europe and the US east coast, should the Philippine panel grant the additional though unnecessary entitlements requested by UAE.

Within the last two years, PAL re-connected Manila to four destinations in the Middle East, to London and New York. Any additional entitlements to UAE carriers would create a distortion in the market and could possibly lead to PAL pulling out of these new routes.

Philippine Airlines Promo - PAL Promo and PAL Discount Fares

PAL is not alone at denouncing the unfair practices of UAE carriers – After Delta Air Lines, United Airlines and American Airlines earlier formed an alliance (Partnership for Open & Fair Skies) to compel the US government to investigate the multi-billion dollar subsidies enjoyed by Gulf carriers, the US-based Air Line Pilots Association (ALPA) added their voice, saying that Middle East carriers' subsidies are undermining Open Skies principles.

Capt. Tim Canoll, president of ALPA, which represents more than 52,000 pilots in the US and Canada, said, “These massive subsidies help Qatar Airways, Etihad Airways, and Emirates Airline purchase aircraft in numbers far beyond what is needed to serve current passenger demand.” “It’s obvious that the subsidized aircraft are being purchased to siphon off existing passengers rather than creating new ones—meaning U.S. airlines will lose business and that U.S. jobs are threatened,” added Capt. Canoll.

A number of European countries had expressed similar concerns at the undue advantage by Gulf carriers:

In May 2015, the Netherlands transport ministry moved to stop Gulf carriers from obtaining more landing rights at Amsterdam Schiphol airport.

In March 2015, French Transport Minister Alain Vidalies linked the grant of air traffic rights to safeguards against illegal subsidies and unfair practices.

The European Commission recently promised to schedule negotiations for a new Europe-Middle East treaty after the French and German governments raised their concerns over unfair Gulf carrier competition.

The German government also recently stopped further Middle East airlines expansion after Gulf carriers flooded the Mideast-Germany market with 529 monthly flights.

PAL appealed on the Philippine panel of the air talks to resist any pressure to grant additional entitlements to UAE carriers and instead challenge them to mount direct flights to airports outside Manila.

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