Philippine Airlines swings to first half loss as fuel costs jump 48%

Insider Spotlight

• PAL swung to a $25.1 million first-half loss as fuel costs jumped 48 percent.
• Second-quarter losses deepened to $103.6 million as fuel expenses surged 88 percent.
• PAL retained a $456.3 million cash buffer and generated $135 million in positive free cash flow.

Taipan Lucio Tan’s Philippine Airlines swung to a $25.1 million net loss in the first half of 2026 from a $136.7 million profit a year earlier as soaring fuel costs overwhelmed higher passenger yields and revenue growth.

The deterioration was most pronounced in the second quarter, although PAL maintained a sizeable cash buffer:

• Second-quarter net loss reached $103.6 million, reversing a $60.2 million profit a year earlier as fuel expenses surged 88 percent.
• First-half revenue still grew 5.9 percent to $1.75 billion, but fuel costs jumped 48 percent to $674.5 million and swallowed 39 percent of operating expenses.
• PAL ended June with $456.3 million in cash and generated $135 million in positive free cash flow, providing a cushion against continued fuel pressure.

Management’s view

“The Middle East conflict has created significant near-term pressure on our fuel costs, and our second-quarter results reflect that impact. At the same time, our first-half performance demonstrates PAL’s underlying resilience,” PAL president Richard Nuttall said in a statement on Thursday. 

“We moved quickly on fare and network adjustments, protected our liquidity, and continued investing in the fleet and partnerships that will strengthen our long-term competitiveness,” he added.

Fuel overwhelms revenue growth

PAL raised fares and adjusted flights on selected domestic, Middle East and regional routes to offset higher fuel prices, while keeping its long-haul international network largely stable.

Passenger traffic fell 3.1 percent to 8.2 million and load factor slipped to 78.9 percent from 81.6 percent, although higher fares helped passenger revenue increase 4.5 percent and cargo revenue jumped 30 percent.

The earnings squeeze was evident in ebitda, which dropped 28.5 percent to $271 million even as PAL contained non-fuel cost growth to 4.1 percent.

Outlook

PAL said the Middle East conflict remains the biggest variable for second-half earnings because of its impact on fuel prices, inflation and travel demand.

Domestic demand has been more affected by higher fares, although PAL said its local operations remain profitable, while international demand has held up better.

“International demand remains strong, our cost discipline is holding, and we enter the second half with the flexibility to manage through this disruption while staying focused on our strategic plan,” Nuttall said.

—Edited by Miguel R. Camus