PAL sinks to $159M loss on fuel price surge

Philippine Airlines (PAL) swung to a $159-million net loss in the first nine months of the year, reversing its $158.7-million profit a year earlier, as a sharp surge in fuel costs erased revenue gains and squeezed the flag carrier’s profitability.

In a regulatory filing on Wednesday, PAL said its fuel expenses soared 49.8 percent to $1.02 billion, an increase of $339.4 million, as the Middle East conflict drove jet fuel prices sharply higher.

Average jet fuel prices surged 52.7 percent to $152.72 per barrel, pushing fuel’s share of operating expenses to 39.6 percent from 30.7 percent a year earlier.

The cost spike overshadowed PAL’s four-percent revenue growth to $2.50 billion from $2.40 billion, while total operating expenses climbed 15.9 percent to $2.57 billion.

“Our nine-month results demonstrate the underlying resilience of Philippine Airlines in an operating environment marked by exceptionally high fuel costs and continuing geopolitical uncertainty.

We have responded with disciplined capacity deployment, stronger revenue management, targeted commercial initiatives and tight control of controllable costs,” PAL President Richard Nuttall said.

The airline carried 11.6 million passengers during the period, down six percent year-on-year, after cutting flights on selected routes to contain fuel expenses.

Despite weaker passenger traffic, passenger revenue rose 1.9 percent to $2.08 billion, while cargo revenue jumped 34.8 percent to $158.5 million on higher freight rates and volumes.

Ancillary revenue also increased six percent to $235.1 million, supported by demand for premium seat upgrades and prepaid baggage.

To offset rising costs, PAL adjusted ticket prices and fuel surcharges, reduced capacity on selected routes and tightened operating expenses.

However, the airline warned that elevated fuel prices would remain the biggest drag on its financial performance for the rest of the year.

“While the sharp increase in fuel prices has weighed significantly on profitability, demand for travel remains healthy, and our revenue performance shows that our commercial strategy is gaining traction.

We remain focused on protecting liquidity, strengthening the business and positioning PAL for a return to stronger profitability as operating conditions normalize,” Nuttall said.

Despite the losses, PAL maintained a stronger cash position, generating $247 million in free cash flow during the nine-month period.

Cash and short-term investments more than doubled to $879 million as of end-September from $431 million at the close of 2025, supported partly by its $350-million bond issuance in July and August.

PAL also continued its fleet expansion, adding three Airbus A350-1000s and two Airbus A320s, bringing its operating fleet to 86 aircraft from 79.

The airline has also signed preliminary agreements to acquire up to 20 Boeing 787-10 Dreamliners and 14 additional Airbus A350-1000s to support its long-term expansion.