Soaring energy markets and local currency headwinds have exposed vulnerability in airline operating models, completely eroding record passenger and cargo revenue gains over the past three quarters.
PAL Holdings Inc., the parent firm of Philippine Airlines (PAL), reported a net loss of P9.74 billion in the first nine months of 2026, reversing its P9.88-billion net income during the same period last year due to a weaker peso and surging jet fuel prices.
The Lucio Tan-led airline noted that the depreciation of the Philippine peso against the US dollar inflated its operating costs, while sharp price increases in aviation fuel heavily weighed on overall financial performance.
Total operating expenses grew 23.5 percent to P154.18 billion from P124.85 billion in the previous year. Stripping out foreign exchange movements, operational costs rose by 16.4 percent or P20.51 billion.
The weaker peso accounted for approximately P8.82 billion of the increase in reported operating expenses, driven by the conversion of US dollar-denominated costs into local currency.
Flying operations expenses jumped 41.9 percent to P90.85 billion from P64.01 billion, primarily driven by escalating aircraft fuel and oil expenditures alongside higher depreciation and amortization costs.
Fuel and oil expenses spiked 49.8 percent year-on-year, following a 52.7 percent increase in average fuel prices to $152.72 per barrel as of September 30, 2026.
Despite the cost pressures, PAL’s operating revenues rose 10.3 percent to P149.96 billion from P136.01 billion in the same period last year.
Passenger revenues gained 7.9 percent to P125.83 billion from P116.56 billion, propelled by fare adjustments and heightened fuel surcharges implemented to absorb elevated fuel expenses.
These pricing adjustments increased average passenger yield by 7.1 percent, though overall revenue performance was muted by a 1.84-percentage-point drop in passenger load factor.
Ancillary revenues increased 12.4 percent to P14.25 billion from P12.67 billion, driven by sustained demand for premium seat upgrades, prepaid baggage, and unbundled service options.
Cargo revenues recorded the highest growth across all operational segments, climbing 43.7 percent to P9.64 billion from P6.71 billion, as higher cargo yields and elevated freight rates expanded earnings alongside a 2.9 percent gain in cargo volume.