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Manila hostage fallout hits Philippine Airlines

  • Märkte: Oil products
  • 27.08.10

Philippine Airlines (PAL) has been hit by a series of crises resulting in cancelled bookings and axed flights, potentially hitting jet fuel consumption.

This week's hostage fiasco in Manila is the latest blow to the airline. Eight Hong Kong tourists and an ex-police officer who took them hostage were killed Monday in a botched rescue operation that was televised live throughout Asia.

The deaths of the hostages caused widespread anger in China and Hong Kong. More than 500 passengers due to travel to Manila from Hong Kong and China within the next month have cancelled their bookings, PAL said on Thursday.

"We're closely monitoring the situation and will decide soon whether we will maintain or reduce flights,” said the airline's president, Jaime J. Bautista. Hong Kong accounts for around 6pc of PAL's company's revenues. Mainland China and Macau account for another 3.7pc.

PAL had already cancelled at least 18 international and domestic earlier this month after the abrupt resignation of 26 pilots, who are believed to have joined higher-paying airlines elsewhere. Government intervention and legal threats could not prevent the labour crisis from worsening to involve ground crew and flight attendants unhappy with PAL's outsourcing plans and compensation. The airline's employee association has not ruled out the possibility of a widespread strike.

PAL is already struggling with rising operating costs. Financial results released this week showed its expenses surging by 37pc to $391.6mn in the quarter ending 30 June, mainly because of a surge in the price of jet fuel, its largest cost component. Fuel expenses rose by $55mn during the quarter as jet fuel prices increased to an average of $100.47/bl compared to $70.28/bl in the same period a year earlier. Profit fell to $31.6mn in the quarter, down 11pc from a year earlier.

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