Philippines Aviation Part 5: Philippine Airlines' outlook improves following 2014 and 1Q2015 profits

Improved market conditions in the Philippines, aircraft delivery deferrals and lower fuel prices have significantly improved the outlook for Philippine Airlines (PAL). The Philippine flag carrier returned to the black in 2014 with a small profit and should be able to turn a more sizeable profit in 2015 following a profitable first quarter.

The return to profitability in 2014 and 1Q2015 are mainly a reflection of lower fuel prices and improved market conditions, driven by consolidation and a new more disciplined approach to capacity in the Philippine airline sector.

But the PAL Group also has made strategic and capacity adjustments since Lucio Tan took back control of Philippine Airlines and sister regional carrier PAL Express in late Oct-2014.

Lucio Tan has slowed PAL's fleet and network expansion. Five of the 10 A320 deliveries which were initially slated for 2015 have been deferred, enabling PAL to avert a potential return of overcapacity in the domestic and regional international markets in 2H2015.